Francesca's Holdings Corp. on Monday announced that Chief Financial Officer Kelly Dilts plans to resign effective July 19 "to pursue another opportunity," according to a filing with the Securities and Exchange Commission.
The retailer also said it has named Chief Accounting Officer Cindy Thomassee to replace her. Thomassee joined the company in 2007, arriving from LRG Furniture, a retail subsidiary of Bassett Furniture Industries, where she worked for more than eight years. She's had previous stints as Francesca's interim CFO, from May 2012 to March 2013 and again from December 2015 to April 2016, according to the filing.
The 12-1 reverse stock split shareholders approved last month took effect Monday after markets closed, according to elsewhere in Monday's filing. Per Nasdaq rules, the company must maintain a stock price of $1 per share or above for 30 consecutive business days. The move so far had its intended effect, boosting the per-share price from 44 cents to $4.71 at press time.
Francesca's CFO joins its board chairman, Richard Kunes, in plans to step away from the struggling retailer, although Dilts' departure is imminent while Kunes leaves early next year. The announcement comes just a couple months after she had accepted a $380,000 retention bonus to stay on for a year, according to an SEC filing, and a few days later received 347,126 shares, according to another filing.
The apparel retailer said in its filing Monday that her departure doesn't reflect any "disagreement with the Company or on any matter relating to the Company's operations, policies or practices." Her replacement won't receive similar incentives to stick around, according to that filing. On June 28, the board's compensation committee approved the terms of Thomassee's new employment agreement, which includes an annual base salary of $325,000 and "an annual incentive bonus pursuant to the Company's annual bonus plan as in effect from time to time, with her target bonus to be set at 50% of her base salary."
The company is likely telegraphing a message of continuity with the appointment of a longtime employee, according to Patrick Collins, a partner at Farrell Fritz with expertise in bankruptcy, restructuring and distressed retail. The company hasn't had a permanent CEO since the February departure of Steve Lawrence; Michael Prendergast has been serving in that role in the interim.
"Because of the position that they're in, they may want to assure people that, by promoting someone from within and naming a new CFO on a permanent basis and not in an interim basis, it shows stability," he told Retail Dive in an interview. "That in their minds would calm concerns."
There are many concerns. In addition to facing delisting — which, as is common, has sent many of its institutional investors fleeing — the company has been bleeding sales. Net sales in the first quarter fell 13% to $87.1 million as comps also dropped 13%, mostly thanks to declines in traffic and conversion rates, the company said last month. Loss from operations widened to $9.7 million from $4.5 million in the prior-year quarter.
The turnaround led by Prendergast is centered on cutting costs, including reducing Francesca's footprint. The retailer plans to shutter at least 30 stores in coming months, after closing eight in that quarter, the company said last month. At the beginning of the current quarter, the company ran 722 locations, mostly in malls.