Justice helps Ascena turn it round in Q4

By

Robin Driver

Published
Sep 25, 2018

Mahwah, New Jersey-based womenswear retailer Ascena Retail Group, Inc. reported its first company-wide quarterly comparable sales increase since 2015 on Monday, as its kids fashion segment led growth in the fourth quarter.

 
Net sales for the fourth quarter ended August 4, 2018 increased to $1.77 billion, up from $1.66 billion in the prior-year period, reflecting growth in comparable sales of 4%, while net income totaled $33.2 million, compared to a net loss of $15.8 million.
 
The company’s tween-focused Justice brand led the way with comps growth of 15%, while premium label Loft also reported an impressive 7% increase. Brands in Ascena’s value fashion segment fared less well, with Dressbarn in particular seeing a 5% decrease in comps.

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Ascena CEO David Jaffe was, however, keen to point out in a press release that the struggling low-cost brand had, in fact, seen a 9 percentage point sequential comparable sales improvement in relation to Q3.
 
“Our fourth quarter reflected sequential comp improvement across all our brands, and the first enterprise-level positive comp quarter for Ascena since the second quarter of Fiscal 2015,” said Jaffe.
 
“We continue to make good progress across the three pillars of our Change for Growth transformation program. We remain on track to achieve $300 million in annual run rate savings by July 2019, and are currently implementing the two remaining large capability-building components of our transformation program – localized planning and our customer experience management ecosystem,” he added.
 
Ascena’s full-year net sales for fiscal 2018 totaled $6.58 billion, down from the $6.65 billion reported in 2017, dragged down by a decline in comparable sales of 2%.
 
The company did, nonetheless, manage to reduce its net loss, which came to $39.7 million, in 2018, compared to $1.07 billion in the previous year.
 
As part of its fleet optimization program, Ascena carried out 185 net store closures in fiscal 2018 and currently operates 4,622 locations throughout the US.
 
The company is maintaining its full-year guidance for fiscal 2019 and expects to achieve net sales of between $6.45 and $6.55 billion with comps growth in the low single digits. Net sales in the first quarter are expected to be between $1.54 and $1.56 billion.