Ascena Retail Group Inc., which operates the Dressbarn, Maurices, Catherines, Lane Bryant and Justice brands, posted a 32 percent drop in net earnings for its second quarter ended Jan. 25 and saw softness across all of its brands.
With the weather’s impact continuing right into early March, and particular weakness at the Justice tween chain, Ascena lowered its guidance for the second consecutive quarter and said it would be stepping up efforts to reduce inventories.
“We are implementing promotional strategies and receipt flow adjustments to bring inventory balances back to targeted levels,” said David Jaffe, president and chief executive officer.
The company reduced its guidance for adjusted earnings per diluted share from continuing operations for the fiscal year ending in July, to between $1 to $1.05, compared with $1.25 to $1.30, based on total comparable sales expected to increase in the low single digits, an effective tax rate seen at 36 percent, capital expenditures in the range of $475 million to $500 million and net store growth in the range of 50 to 70 units.
Jaffe was candid about how tough business has been recently, and suggested some uncertainty ahead during a conference call. “Consistent with the overall retail environment, we experienced increasingly challenging conditions, as we closed out the holiday selling period and ended the second quarter.”
Jaffe said Justice has been losing some basics business to big boxes, like Wal-Mart Stores Inc. “Consumers migrated to them just based on price. That’s why we said the core product is struggling. There is significant price sensitivity out there. I would argue it’s not just the tween shopper. We’re seeing it throughout the whole teen segment.”
Differentiating the basics assortment is “a work in progress....By back-to-school, we hope to have addressed that.” The company is also planning additional sales days at Justice and looking to stage new types of promotions. “It’s unclear to me, as much as I would like to be bullish in the spring, whether we have truly come out of the weather funk and whether the economy has improved for consumer discretionary spending, or if we are still on a durable trend.”
On the more positive side, Jaffe said the company is making progress attaining synergies across the divisions to save money and by fall will have one new national retail distribution center serving all divisions. Ascena is also developing an existing facility for e-commerce, which will go live this spring. The later Easter should help spring business, and in warmer climates there has been some better response to seasonal offerings.
In other initiatives, Jaffe cited the partnership with Ruben and Isabel Toledo at Lane Bryant that began with a small holiday collection last year and progresses with a complete collection for spring with a fashion show planned, and added thatthe intention is to announce additional designer collaborations; that the fashion content at Lane Bryant is on the rise with investments in wear-to-work and activewear paying off, and that more targeted email campaigns are in the future. He also cited growing investments in e-commerce to develop an omnichannel experience.
Earnings were $31.9 million versus $47.2 million in the year-ago period, attributed to a profit decline at Justice, the harsh winter and investments in new stores, merchandising strategies, design strategies and e-commerce.
Consolidated e-commerce sales increased 28 percent in the last quarter to $149 million, while consolidated comparable store sales were down 3 percent. Comps at Justice were down 5 percent last quarter. Total sales rose to $1.27 billion from $1.24 billion.
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)
Breaking News: @hedislimane joins @celine as its new artistic, creative and image director. One of fashion’s preeminent image-makers and trendsetters, Slimane is to join the LVMH brand on Feb. 1 and unveil his first fashion proposition for men and women next September during Paris Fashion Week. It marks a major homecoming for Slimane, who cemented his reputation – and influenced men’s tailoring for more than a decade – as the designer of Dior Homme between 2000 and 2007. He went on to reinvent and ignite the house of Yves Saint Laurent, which he rechristened Saint Laurent, between 2012 and 2016 – all the while maintaining a close relationship with the Arnault family, which controls LVMH and Dior. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
“Personally I believe the Eighties have been the richest and more vivacious period for international fashion,” Giorgio Armani said when asked what his favorite decade of fashion is. It was a moment of disruption and experimentation and only thinking back to the first years of that decade is always an emotion for me, for what they have meant to me and my work.” The influence is clear in @giorgioarmani spring 2018 collection, pictured here, which was full of bright colors and unexpected prints. Read more about which decades designers loved most on WWD.com #wwdfashion #wwddecades (📷: @aitorrosasphoto)
For Lady Gaga’s only Italian show on her “Joanne World Tour,” the singer wore a range of @versace_official outfits. The standout piece: this custom-made bodysuit inspired by the brand’s spring 2018 collection. #wwdfashion (RG: @ladygaga)
@_camillaruth_ is expanding on the wellness-craze concept with @westbourne – a new NYC restaurant that’s both a healthy-minded café as well as a business that gives back to the community. Marcus works with the Robin Hood foundation to give back to The Door, a non-profit providing youth development services, and also hires employees through The Door. Read our full interview with Marcus on giving back through food on WWD.com. #wwdeye (📷: @lexieblacklock)