Consumer discretionary

Francesca’s Holdings Corp (NASDAQ:FRAN) Affirmed Hold on Positive CEO Appointment: Stifel

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Steven Lawrence predicted to add more stability to the business through his expertise, building on the positive stock momentum for longer term

Francesca’s Holdings Corp (NASDAQ:FRAN) announced on Tuesday that it has appointed a new CEO. It confirmed the appointment of Steven P. Lawrence as the CEO as well as the President of the company. Following this news, Stifel affirmed the boutique at its Hold rating. The firm views the new appointment in positive light, deeming it to be beneficial for the future of the business. Thus, its shares soared 0.92% after the news surfaced the market. The new President is expected to take on the role in the beginning of October. He will be the successor to the interim CEO Richard Kunes who had assumed the post since the former CEO Michael Barnes stepped down earlier in May.

In addition to this, Stifel analyst Richard Jaffe commented that he believes that Mr. Steven Lawrence is a good fit for the Texas-based business. He was confident on the new appointment after talking to the management. He believes that the new hire has enough experience in omni-channel buying, marketing, and store operations. He also stated that since the company already has a healthy merchant in place, the new CEO would further strengthen the position, thus confirming the news as positive for the business. He thinks that Mr. Lawrence is capable of focusing on all aspects of the company given his vast experience. Thus, Mr. Jaffe is of the opinion that strategies laid down by Michael Barnes, the former CEO, are enough to drive positive results in the near term effectively. This would allow the new chief executive to focus on long term growth of the organization.

Furthermore, Richard observed that e-commerce platform represents about 5% of the total sales and remains an important opportunity for the long term growth. He also applauded the $574.87 million enterprise on skipping some of the mistakes made by other rivals, by delaying its entry into the omni-channel. The rivals had made huge investments in technologies that are no longer required, which this company has omitted giving it a safety cushion. Moreover, he was confident on the management’s indication of e-commerce making positive contributions to its EBIT dollars, despite being dilutive in nature to the operating margin. Also, he believes the platform has immense potential in the future and can grow up to add 20% to the total sales of the business. This would give another opportunity to the new hire to build upon the strengths of the company.

The analyst also believes that the new appointment would lead to greater stability in the business. This in turn would reduce disruption due to Mr. Lawrence’s exceptional experience in the area leading the investors to be bullish, believing the strong momentum of the shares would continue for a longer term as it obtains consistent strategy execution and far learner inventories than before. This is why, Francesca’s Holding has been presented with two Buy and 10 Hold ratings from FactSet Fundamentals. It has also been given average price target of $15. However, this price target represents slight downward potential of 2.02% under the last closing price stated at $15.31.

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