Progressing in turnaround efforts, the Ascena Retail Group, parent company of Loft, Ann Taylor, Lane Bryant, Cacique, Dressbarn, Justice and Lou & Grey, reported net income from continuing operations of $32 million, or 16 cents per diluted share, in its fiscal first quarter ended Nov. 2.
That compared with a net loss of $24 million, or 12 cents per diluted share, in the year-ago period. Comparable sales were flat. Excluding the operations of Dressbarn, which is being liquidated, comparable sales were negative 2 percent. Net sales for the first quarter were $1.3 million compared to $1.34 million in the year-ago period.
By division, comparable sales were down 1 percent at Ann Taylor; down 2 percent at Loft; up 2 percent at Lane Bryant; down 5 percent at Catherines, and down 6 percent Justice.
Operating income was $40 million, which primarily reflects the benefit of cost reductions, offset in part by lower gross margin; adjusted operating income, excluding restructuring costs, was $45 million. The operating results were within guidance.
For its second fiscal quarter, Ascena is projecting net sales of approximately $1.2 billion to $1.23 billion; comparable sales of negative low-single-digits, and
adjusted operating loss of $40 million to $60 million. E-commerce currently represents 34 percent of total sales.
The company said the wind-down of Dressbarn was on track with store closures expected to be completed in December 2019. At the end of the quarter, there were 544 Dressbarn stores left. The company has a total of 3,445 stores.
Inventory levels improved last quarter and were down 5 percent from a year ago.
Cash and revolver availability of $680 million was compliant with all covenants, Ascena said.
“We were pleased to have exceeded our adjusted operating income expectations for the first quarter through better-than-expected improvement in operating expenses,” said Gary Muto, chief executive officer. “We continue to make advances on right-sizing our cost structure, while focusing on driving sustainable growth and improved operating margin for each of our segments. In addition, we once again ended the quarter in a strong cash and liquidity position with no borrowings under our credit facility as we remain disciplined in managing working capital and rationalizing our capital expenditures.
“While we are encouraged by the progress we are making, we know there is more work to be done. We are moving our brands in the right direction by capitalizing on their distinct market leadership positions while maintaining our focus on optimizing our capital structure. The steps we are taking now set us up to provide consistent profitable performance and enhance shareholder value over the longer term.”
During a conference call, Muto said inventory is “fresh. We are seeing winds in the business,” and cited three key objectives: sustainable growth improved operating margins ad optimizing capital structure.”
He also cited several initiatives, among them:
* A tightened test and react approach to more quickly respond to shoppers.
* Growing customer files, prospecting new customers and advancing personalization.
* At Ann Taylor, pumping up pants offerings and adding more day into evening choices for holiday for versatility.
* At Loft, adjusting styles to be less serious and more playful and festive, launching online-only capsule collections.
* At Lane Bryant, re-engineering tops, adopting a good, better, best price structure, launching in-store styling.
* At the kids division, added better values, amplifying digital marketing, personalization, and buy online, pick up in store was just rolled out.