Ascena Retail Group, owner of the Ann Taylor, Loft and Lane Bryant chains, has widened its net loss in the third quarter and reported a drop in sales, three weeks after announcing the wind-down of its Dressbarn business.
For the three months ended 4 May, the company saw its net loss grow to US$238m, from a loss of $40m the year before. Excluding non-cash impairment charges and other items, net loss totalled $51m.
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Gross margin narrowed to 57.1% from 59.5% last year, mainly due to higher promotional activity to clear elevated inventory levels, soft pre-Easter selling at its Premium Fashion and Kids Fashion segments, and clearance of the under-performing tops assortment at Lane Bryant.
Net sales, meanwhile, were almost flat at $1.27bn, while comparable sales were also flat for the quarter.
In 2016 Ascena began a restructuring under its ‘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. Goals included cost savings of up to US$150m by 2019, on top of savings of $235m from its integration of Ann Inc, owner of the Ann Taylor and Loft chains, which it acquired in August 2015.
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CEO Gary Muto, who succeeded David Jaffe last month, says the firm’s third-quarter results were better than anticipated, driven by stronger comps. “With the elimination of our Value Fashion segment, we are already re-aligning our financial and human capital to support the areas of the business with the greatest growth potential. We have some of the most iconic brands in retail, and are well-positioned in our customers’ minds to capitalise on the equity built into these brands.”
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By GlobalDataMuto adds: “Beyond the $300m savings from our Change for Growth programme, we have identified an incremental $150m opportunity. We expect the majority of these incremental savings to be realised in fiscal 2020, and we continue to seek further cost reduction opportunities on an ongoing basis.”
Last month, Ascena announced plans to close its 650 Dressbarn stores, and completed the sale of its Maurices women’s clothing business for $300m.
