Ascena swings to quarterly loss as sales stumble
today Oct 4, 2019
Ascena Retail Group, Inc., the Mahwah, New Jersey-based owner of Ann Taylor, Lane Bryant and other brands, slipped into net loss in the fourth quarter, reporting a slight dip in sales of 4.3% as it continues to wind down its Dress Barn value banner.
For the fourth quarter ended August 3, 2019 the company announced net sales of $1.45 billion, down from $1.52 billion in the year-ago period.
The retail group’s comparable sales were flat in the period, as increases of 12% at Dress Barn and 1% in the company’s premium fashion segment (made up of the Ann Taylor and Loft brands) were offset by decreases of 4% in plus fashion (Lane Bryant, Catherines) and 5% at Justice, Ascena’s only kids’ fashion-focused banner.
During the quarter, the company made significant progress with the divesture of its value segment, completing the sale of its Maurices brand at the beginning of May and shuttering 45 Dressbarn locations. According to Ascena, its wind down of Dressbarn is “progressing well and on track to complete store closures in December 2019.”
Thanks to its ongoing fleet optimization program, the company managed an 8% reduction in its charges, which totaled $421 million, or 28.9% of sales, compared to $459 million, or 30.2% of sales, in the prior-year period.
Nonetheless, Ascena reported a quarterly net loss of $358.0 million, or $1.81 per diluted share, compared to net income of $33.2 million, or $0.17 million, in the same period in the previous year.
Discounting the contribution of the Maurices brand, sold by Ascena early in Q4, the company reported a net loss from continuing operations of $420 million ($2.12 per diluted share) compared to net income from continuing operations of $16 million ($0.08 per diluted share) in Q4 2018.
Ascena also appointed two new independent directors to its board over the course of the fourth quarter: Gary Begeman and Paul Keglevic.
Begeman has served as general counsel at NII Holdings for a number of years, having previously worked in a series of senior positions at Sprint and Nextel Communications. Keglevic is the former CEO of Energy Future Holdings and also has previous experience as the EVP, CFO and chief risk officer at TXU Corporation.
The retail group’s full-year sales slipped 1.3% from $5.57 billion in fiscal 2018 to $5.49 billion in 2019, while its annual net loss from continuing operations totaled $782.3 million ($3.96 per diluted share), widening significantly from the loss of $143.0 million ($0.73 per diluted share) reported by the company in the previous year.
“Looking ahead, by shifting our focus to our brands and right-sizing our cost structure, we plan to capitalize on the meaningful and differentiated presence our brands have in the marketplace,” commented Ascena Gary Muto in a release. “We are evolving our merchandising strategy to incorporate greater versatility in our assortment while maintaining flexibility to keep pace with her changing desires in order to deepen loyalty with existing customers, reengage lapsed customers and attract new customers.”
Ascena expects to achieve net sales of between $1.100 billion and $1.125 billion in the first quarter of fiscal 2020, while comparable sales are predicted to be in the negative low single digits.
Following the announcement of its latest financial results, shares in Ascena fell more than 12% in the extended session on Thursday.
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