Success Story is a Sourcing Journal feature highlighting innovative solutions across all areas of the supply chain.
From bankruptcy scare to big shot, Houston-based women’s specialty retailer Francesca’s has turned its business around for the better, becoming a rare Covid recovery story.
In 2020, the Covid-19 pandemic broke out, disrupting how the entire fashion industry operated. Companies began releasing clothing items later than scheduled because of production and distribution delays in addition to seeing inventory and profit loss.
But while many retailers struggled with pressing problems, 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 business.
“It’s public information that we weren’t a very healthy company, pre-Covid,” said Andrew Clarke, CEO of Francesca’s. “If anything—as we look back on 2020—I think Covid actually gave us a tremendous opportunity as a company to finally restructure.”
‘Pulled together in the face of adversity’
As Clarke put it, there’s nothing like a crisis to bring a company together.
In the middle of 2020, the specialty retailer raised the bankruptcy possibility after posting fourth-quarter earnings results. At the time, the company said it was working to implement a comprehensive plan to mitigate the damage of the coronavirus pandemic.
Francesca’s then borrowed $5 million under an amended asset-based revolving credit facility and filed for an income tax refund for $10.7 million under the Corona Aid, Relief and Economic Security Act (CARES Act) that allowed companies to carryback net operating losses to prior years.
“Covid and the possibility of bankruptcy taught us that we had to move very quickly and not seek perfection,” Clarke said. “Looking back—with two and a half years of perspective—it definitely wasn’t easy at the time. But as a team, we pulled together in the face of adversity.”
Franki by Francesca’s
One successful venture that came out of the company’s restructuring was Franki by Francesca’s, a “girls and tween” clothing brand.
“Franki was created because we had a substantial amount of young girls coming into Francesca’s wanting to look like their big sister. But, from a sizing perspective, we couldn’t fulfill her needs because she wasn’t wearing women’s sizes yet,” said Jann Parish, chief marketing officer at Francesca’s. “So, we decided to create Franki as a little sister approach to Francesca’s.”
However, success did not come easily.
While creating Franki, Francesca’s was still a “business in crisis” with “Covid impacting the traffic” to its stores. Adding insult to injury, Francesca’s wasn’t working with big marketing budgets to launch a new brand, so they had to organically develop and market the product through its existing channels, both online and in stores.
“We saw an opportunity in the tween market, and we went for it. In fact, the team was able to bring Franki to market in about 100 days, bringing us into a new business and a new brand despite the challenges,” Clarke said. “It has been over two years since we launched Franki, and we’re tremendously proud of the progress that the brand is making.”
Now, Clarke said the company is going to continue scaling the Franki brand by opening a few more stores—in addition to the Francesca’s stores opening during Q1 in Houston and Austin—during 2023.
Continuing its growth and success post-pandemic, Francesca’s announced Forever Francesca’s earlier this year, a 360-resale program powered by ThredUp, one of the largest online resale platforms for fashion.
“Before partnering with ThredUp, we were looking at what kind of initiative we could put into place around resale, making sure we were contributing to sustainability while also giving our customer something they were looking for,” Parish said.
By leveraging Resale-as-a-Service (RaaS), Francesca’s will utilize ThredUp’s proprietary operating platform to allow its customers to shop secondhand products directly through its website and resell apparel for Francesca’s shopping credit.
“It made sense to take the development and the ownership off Francesca’s and have a great partner that could do it for us,” Parish said. “ThredUp also has a customer base that resembles ours, so this partnership allows us to capitalize on both businesses’ customers and grow mutually.”
Adding to its qualities, Forever Francesca’s promotes circularity by encouraging customers to buy secondhand items at francescas.thredup.com to extend the lifespan of their clothes.
In addition, customers can earn Francesca’s credit by sending back their “pre-loved” items. To do so, customers generate a prepaid shipping label from the ThredUp site page, fill any shippable box or bag with their items and send it to ThredUp for free.
After sending the item back, customers will receive Francesca’s shopping credit which can be used in Francesca’s digital and physical stores.
“The ability to take our product and bring it back into the system in a full 360 way was a valuable thing to get started on,” Parish said. “The expectation of Gen Zers is high for a brand, and we want to make sure that we’re living up to what they’re looking for while also still giving them the means to express themselves and find fun things at Francesca’s and Franki’s.”
While these ventures have proven to be successful for Francesca’s thus far, Clarke said the company has no plans to slow down anytime soon.
“I’m tremendously proud of the Francesca’s team and how resilient we are,” Clarke said. “Our business is in growth mode, and I’m excited for what’s to come in 2023 and beyond.”