According to the law firm press release, Francesca’s operates a chain of 429 retail boutiques and a retail website offering fashion apparel, jewelry, accessories, and gifts.
The complaint alleges that, during the Class Period, defendants issued materially false and misleading statements regarding the Company’s financial performance and future prospects. Specifically, the complaint alleges that during the Class Period, defendants failed to disclose the following adverse facts: (i) that unseasonably rainy and cold spring and summer weather had diminished the mall traffic Francesca’s relied upon to drive same-store sales growth; (ii) that a competitive back-to-school retail environment weighed on same-store sales growth; (iii) that same-store sales were declining, forcing Francesca’s to rely upon new store openings to increase sales; (iv) that Francesca’s had been forced to engage in promotional selling at significant discounts during its first quarter 2013 in order to meet its financial targets; (v) that Francesca’s had been forced to increase promotional activity during the second quarter of 2013; (vi) that Francesca’s concealed the impact sales terms and margins with its suppliers would have on its ability to maintain above-average profit margins; and (vii) that, as a result, the Company was not on track to achieve the financial results defendants had led the market to expect during the Class Period. As a result of defendants’ false and misleading statements during the Class Period, certain company insiders were able to sell hundreds of millions of dollars of Francesca’s stock at artificially inflated prices.
On September 4, 2013, the Company announced dismal second quarter 2013 financial results and third quarter 2013 guidance. On this news, the price of Francesca’s common stock, which had traded above $32 per share during the Class Period, plummeted more than 44% from that level to close at $17.79 per share on September 4, 2013.
On December 17, 2013, the Court issued an Order consolidating cases, appointing lead plaintiff, and approving lead counsel. Lead Plaintiff filed a consolidated complaint on March 14, 2014.