US women’s wear retailer Ascena Retail Group has reported a slight dip in earnings and sales for the first quarter on the back of fewer stores as part of an ongoing optimisation programme and increased expenses.
Net income fell to US$5.9m from US$6.6m a year earlier, while operating income slipped to US$38.9m from US$39.9m. Ascena said the positive impact of comparable sales growth and lower depreciation and restructuring-related costs were offset by lower non-comparable sales, lower gross margin rate, and increased SG&A expenses.
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Net sales were flat on last year at US$1.59bn. A 3% increase in comparable sales, driven by strength in the premium and kids segments, was offset lower non-comparable sales and adoption of the new revenue recognition accounting standard. The decrease in non-comparable sales was caused by the unfavourable impact of the 53rd week in the company’s prior fiscal year and fewer stores as a result of the company’s ongoing fleet optimisation programme.
In 2016 Ascena announced a restructuring under the “change for growth” programme to focus on key customer segments, improve its time-to-market and reduce working capital, with the changes including a new brand services team to oversee supply chain, sourcing and logistics. It is expected to realise cost savings of up to US$150m by 2019, on top of the $235m savings also expected from its integration of Ann Inc, owner of the Ann Taylor and Loft chains, which it acquired in August 2015.
David Jaffe, chairman and CEO of Ascena Retail Group said: “Our first quarter results represent another step forward in our journey to transform Ascena into a more agile, profitable company.
“We have built a solid foundation over the course of our transformation, consisting of new brand leadership and significantly enhanced enterprise capabilities. We’ve strengthened this foundation through an enhanced understanding of our customer that we have developed from our recently launched customer insights initiative. We believe our efforts are beginning to produce positive results, and are focused on building upon our momentum.”
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By GlobalData“In parallel with the execution of strategic brand growth initiatives, we continue to evaluate all opportunities to increase shareholder value, including ongoing assessment of our brand portfolio, development of our platform capability to enable delivery of third party services, and potential new channels of distribution.”
