I'll take the contrarian view that apparel has bottomed. May's Retail Sales report showed good recovery in Clothing, Clothing Accessories and Department stores. Let's see what this Friday's Retail Sales release shows.
Appropriate contrarian view should be that Fran gets their trend spotting right, have sufficient Open to Buy room to order such merchandise, hope their spotting for spot on & transition doesn't happen fast enough for them not to react appropriately.
Rinse & repeat.
Macro headwinds I believe account for ~30%. Rest is Fran specific.
Main contention is that Fran won't be able to sustain its 50+% gross margin because of special relationships with its ex-related parties. If that was the case, they why is it that they continued to maintain 50+% gross margin over a tough 2013 when in July 2012 those related parties ceased to remain as such amid no single supplier accounting for more than 6% of inventory?
I've been digging some online metrics:
Fran's website has increased unique visits by 44% YTD over the 2013 period. Global website page rank has jumped 11k, avg. page views per visitor & time spent have both increased 40+%, bounce rate is ~30% decreasing by 5%. From such indications, it appears their marketing campaign on SEO, SEM, Social Media impressions, Under the Gunn sponsorship & overall mobile upgrade is starting to bear fruit.
Apart from overall mix and jewelry transition, marketing is I believe most important. If they can gain higher visibility chances of conversion improve.
And I'm not buying the lawsuit claims that I think have also led to depressed PPS. If this goes down further, its a great buying opportunity.