How Francesca handles bankruptcy with a new brand – Sourcing Journal

Success Story is a Sourcing Journal feature that highlights innovative solutions across the supply chain.

From bankruptcy scares to the big shot, Houston-based women’s specialty retailer Francesca’s has taken a turn for the better and become a rare Covid recovery story.

In 2020, the Covid-19 pandemic broke out and disrupted the functioning of the entire fashion industry. Companies began releasing garments later than planned due to production and distribution delays, as well as inventory and profit losses.

But while many retailers grappled with pressing issues, Francesca’s, which operates a nationwide chain of Francesca’s and New Girls and Tween Franki by Francesca’s boutiques, used the pandemic as an opportunity to restructure its operations and store.

“It’s public knowledge that we weren’t a very healthy company before Covid,” said Andrew Clarke, CEO of Francesca’s. “If anything – as we look back at 2020 – I think Covid has indeed given us as a company a tremendous opportunity to finally restructure.”

“Sticking Together in the Face of Adversity”

As Clarke put it, there’s nothing like a crisis to bring a company together.

In mid-2020, after the publication of the fourth quarter results, the specialist retailer raised the prospect of insolvency. At the time, the company said it was working to implement a comprehensive plan to contain the damage caused by the coronavirus pandemic.

Francesca then borrowed $5 million under an amended asset-based revolving credit facility and filed for a $10.7 million income tax refund under the Corona Aid, Relief and Economic Security Act (CARES Act), which allowed businesses to do so to carry forward net operating losses to prior years.

“Covid and the possibility of bankruptcy have taught us that we have to act very quickly and not strive for perfection,” Clarke said. “Looking back – with a perspective of two and a half years – it was definitely not easy back then. But as a team we stuck together in the face of adversity.”

Franki from Francesca

A successful project that emerged from the company’s restructuring was Franki by Francesca’s, a clothing brand for girls and tweens.

“Franki was started because we had a significant number of young girls who came to Francesca to look like their big sister. But in terms of sizing, we couldn’t meet her needs because she wasn’t already wearing women’s sizes,” said Jann Parish, Chief Marketing Officer at Francesca’s. “So we decided to create Franki as Francesca’s little sister.”

However, success did not come easily.

During Franki’s inception, Francesca’s was still a “business in crisis” as “Covid affected traffic at its stores”. To make matters worse, Francesca’s wasn’t working with large marketing budgets to launch a new brand, so they had to develop the product organically and market it through the existing channels, both online and in-store.

“We saw an opportunity in the tween market and we went for it. In fact, the team was able to get Franki to market in about 100 days and, despite the challenges, took us to a new business and brand,” said Clarke. “It has been over two years since we launched Franki and we are very proud of the progress the brand is making.”

Now, Clarke said, the company will continue to expand the Franki brand by opening a few more stores throughout 2023 — in addition to Francesca stores opening in Houston and Austin in the first quarter.

ThredUp partnership

Continuing its post-pandemic growth and success, Francesca’s earlier this year announced Forever Francesca’s, a 360 resale program powered by ThredUp, one of the largest online fashion resale platforms.

“Before we partnered with ThredUp, we thought about what kind of initiative we could launch around resale to make sure we were contributing to sustainability while still offering our customers something they were looking for,” said Parish.

Leveraging Resale-as-a-Service (RaaS), Francesca’s will leverage ThredUp’s proprietary operating platform to allow its customers to shop for second-hand products directly through its website and resell clothing for Francesca’s shopping credit.