DIpil Das
[caption id="attachment_97587" align="aligncenter" width="700"]
Source: Company reports/Coresight Research[/caption]
4Q19 Results
Ascena Retail Group reported fiscal 4Q19 revenues of $1.27 billion, above the consensus estimate of $1.20 billion, but down from the year ago quarter. The company reported adjusted EPS of $(0.13), down from the year ago period.
The company said it continues to consider options to optimize its balance sheet and liquidity. Management emphasized that of the options considered, bankruptcy was not one of them.
Management reported its comp sales at premium brands Ann Taylor and LOFT grew 1% overall, led by LOFT which grew by 2% compared to a 7% increase in the year ago period. Promotional activity impacted the profitability for the quarter, but the company was able to clear excess inventory for its premium brands and says it is ready for the fall season. For Ann Taylor, management highlighted it aims to shift the brand perception away from “wear to work” to one that is more “relevant to her lifestyle.” The goal is to deepen loyalty with current customers while reengaging customers who may have left the brand.
In kids, comparable sales fell 5% in the quarter, following an increase of 15% in Q4 last year. The promotional activity was also higher in the kids’ segment, but the brand was able to clear excess inventory in time for the fall season. Justice is looking to attract ages 6 to 12.
Management said they are looking to capture a higher end of the price spectrum, and based on consumer insights, the company is moving away from “sparkle” and will trend more toward subtle toned-down looks.
[caption id="attachment_97615" align="aligncenter" width="700"]
Source: Company reports[/caption]
The company ended the quarter with 3,445 stores, closing 75 stores across its banners as shown in the table below. On May 20, 2019, Ascena announced it would close its Dressbarn business, which will leave the company with 2,829 stores. Management reported winding down the Dressbarn business is going according to plan, and that all stores will be closed by December 31, 2019. Since the closure announcement, business has accelerated, with Dressbarn delivering comp sales of 12% during the quarter.
[caption id="attachment_97605" align="aligncenter" width="700"]
Source: Company reports[/caption]
Outlook
Due to the closure of the company’s Dressbarn business, the company provided 1Q20 guidance only for the continuing operations of its premium fashion brands, plus fashion brands and kids segments. It projects net sales of $1.10-$1.12 billion. Management expects comparable sales of negative low single digits.
Source: Company reports/Coresight Research[/caption]
4Q19 Results
Ascena Retail Group reported fiscal 4Q19 revenues of $1.27 billion, above the consensus estimate of $1.20 billion, but down from the year ago quarter. The company reported adjusted EPS of $(0.13), down from the year ago period.
The company said it continues to consider options to optimize its balance sheet and liquidity. Management emphasized that of the options considered, bankruptcy was not one of them.
Management reported its comp sales at premium brands Ann Taylor and LOFT grew 1% overall, led by LOFT which grew by 2% compared to a 7% increase in the year ago period. Promotional activity impacted the profitability for the quarter, but the company was able to clear excess inventory for its premium brands and says it is ready for the fall season. For Ann Taylor, management highlighted it aims to shift the brand perception away from “wear to work” to one that is more “relevant to her lifestyle.” The goal is to deepen loyalty with current customers while reengaging customers who may have left the brand.
In kids, comparable sales fell 5% in the quarter, following an increase of 15% in Q4 last year. The promotional activity was also higher in the kids’ segment, but the brand was able to clear excess inventory in time for the fall season. Justice is looking to attract ages 6 to 12.
Management said they are looking to capture a higher end of the price spectrum, and based on consumer insights, the company is moving away from “sparkle” and will trend more toward subtle toned-down looks.
[caption id="attachment_97615" align="aligncenter" width="700"] Source: Company reports[/caption]
The company ended the quarter with 3,445 stores, closing 75 stores across its banners as shown in the table below. On May 20, 2019, Ascena announced it would close its Dressbarn business, which will leave the company with 2,829 stores. Management reported winding down the Dressbarn business is going according to plan, and that all stores will be closed by December 31, 2019. Since the closure announcement, business has accelerated, with Dressbarn delivering comp sales of 12% during the quarter.
[caption id="attachment_97605" align="aligncenter" width="700"] Source: Company reports[/caption]
Outlook
Due to the closure of the company’s Dressbarn business, the company provided 1Q20 guidance only for the continuing operations of its premium fashion brands, plus fashion brands and kids segments. It projects net sales of $1.10-$1.12 billion. Management expects comparable sales of negative low single digits.