Ascena Retail Group Inc. is pulling the plug on the Brothers tween boys’ brand sold online and in more than a fifth of its Justice tween girls’ stores.
“At this point in its evolution, it is appropriate for Justice to focus on its core girls’ business, including refinement of its merchandise assortment and overall marketing strategy,” said David Jaffe, chief executive officer of Ascena. Michael Rayden retired as president and ceo of Justice last month after orchestrating its acquisition by Ascena, then Dress Barn Inc., in 2009.
Justice introduced Brothers as an e-commerce-only brand in 2011 and began carving out room for it in the Justice stores, beginning with 10 of its units, for the 2012 back-to-school season. In addition to its Web presence, the brand had space in nearly 220 of the 1,009 Justice stores in operation at the end of Ascena’s first quarter on Oct. 25, and plans called for the concept to be stocked in up to 250 stores by the end of Ascena’s current fiscal year this summer.
But the brand failed to gain traction within the stores or online and, as Ascena conducted a strategic review of Justice, Brothers had been competing for investment not only within the Justice organization but also with Lane Bryant, which has also faced challenges in recent seasons. Unlike Lane Bryant in the plus-size space, Justice and Brothers have paralleled those challenges hitting the teen market in recent seasons, such as reduced traffic and consequential high levels of promotion.
Ascena said the closure of Brothers, expected to be wrapped up by the end of its fiscal year, wouldn’t have a material effect on the company’s financial results. The brand represented less than 1 percent of total Ascena revenues of $4.79 billion in fiscal 2014, or below $50 million, and “had been operating at a loss since its inception,” the company said.
Despite its declining performance metrics, Justice remains Mahwah, N.J.-based Ascena’s largest brand by sales, profitability and store count.
In Ascena’s first quarter, sales declined 4.2 percent to $357 million, with comparable sales down 7 percent, and operating profits dropped 21.4 percent to $40.8 million. While Ascena’s comparable sales for the holiday period — between Nov. 22 and Jan. 4 — were up 2 percent, with stores flat and e-commerce up 17 percent, Justice was the only one of its brands to see comps fall during that span, although the 3 percent drop was an improvement over the first-quarter performance.
“We are making significant adjustments to the go-forward promotional strategy for the Justice brand, with spring receipts planned down more than 20 percent,” Jaffe said when Ascena issued its holiday report on Jan. 12, at which time the company lowered its earnings guidance for fiscal 2015.
The firm continues to seek a successor to Rayden.