Francesca’s Holdings Corporation is to close about 140 of its predominantly mall-based stores and warned it will likely need to seek a restructuring under bankruptcy protection if it is unable to raise sufficient additional capital.

In a Securities and Exchange Commission (SEC) filing, Francesca’s said it has adopted a plan to shutter approximately 140 boutiques by 30 January. The retailer operates about 700 locations, meaning the closures represent 20% of its total portfolio.

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It expects to incur total impairment charges of between US$29m-$33m in connection with the move.

Francesca’s said in September it is to explore strategic alternatives, including a restructuring under bankruptcy protection, after swinging to a net loss for the second quarter. 

“If the company is unable to raise sufficient additional capital to continue to fund operations and pay its obligations, the company will likely need to seek a restructuring under the protection of applicable bankruptcy laws,” it said in the SEC filing on Monday (16 November).

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It added its strategic plans are not yet finalised and are subject to numerous uncertainties, including negotiations with creditors and investors and conditions in the credit and capital markets.

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The retailer reported a net loss of US$17.2m for the second quarter ended 1 August from net income of $1.8m a year ago.

Net sales were down 29% to $75.7m from $106m in the comparable prior-year quarter. Francesca’s attibuted the decline in sales to a decrease in traffic and the temporary closure of a majority of its boutiques as a result of the Covid-19 pandemic.