David Jaffe, chairman and chief executive officer of the Ascena Retail Group, has retired from the company and has been succeeded by Gary Muto as ceo.
Muto, president and ceo of Ascena Brands, will join the board. In addition, Carrie Teffner has been named interim executive chair of the board, and Brian Lynch, president and chief operating officer, has left the company. Lynch was spearheading the company’s “change for growth” transformation plan, which Jaffe said is on track to deliver a run rate cost savings of $300 million by July.
The management shake-up comes amid Ascena’s turnaround efforts. The $6.5 billion company has been struggling with uneven performance across its divisions, which cater to different demographics. While performance improved at Ann Taylor and Loft during the company’s second fiscal quarter ended Feb. 2, there were disappointments at Dressbarn, Justice, Cacique and Lane Bryant. Loft saw double-digit comp sales in merchandise margin growth and comp growth in stores and direct business. Ann Taylor also delivered double-digit comp sales and margin growth for the quarter with comp growth driven by its direct channel.
For the fiscal third quarter, Ascena expects a loss per share of 45 cents to 35 cents; net sales of $1.43 billion to $1.46 billion of a year ago; comparable sales negative 4 to negative 2 percent, and a dip in the gross margin rate to 57 percent from 58 percent.
Last March, Ascena sold a majority stake in its Duluth, Minn.-based Maurices division to a subsidiary of British private equity firm OpCapita. The deal was valued at $300 million and will help shore up Ascena’s balance sheet.
Maurices caters to women in the twenty- to thirtysomething age range in small towns and midsize cities across the U.S. and Canada. Ascena retains an equity interest in Maurices. Ascena also owns Ann Taylor, Loft, Lou & Grey, Lane Bryant, Catherines, Justice and Dressbarn.
The 59-year-old Jaffe has been running the company for the last 17 years and started working for it 27 years ago. He’s the son of Elliot and Roslyn Jaffe, the founders of Dressbarn in 1962, which evolved into the Ascena conglomerate of retail fashion brands through a series of acquisitions over the last 15 years. He also years ago relocated Ascena headquarters from Suffern, N.Y., to Mahwah, N.J.
“We grew by acquiring Maurice’s, Justice, Ann Taylor, Loft, Lane Bryant and Catherines,” said Jaffe. In addition, the company started up the Lou & Grey division.
“While this is a difficult decision for me, I’ve got to look at what’s right for Ascena and right for its stakeholders,” Jaffe told WWD in an exclusive interview. “The board and I agreed that this is the right decision. I feel very comfortable stepping down. Gary is ready to take over. This is the succession plan that we have been working on for the last two years. Gary is a genius at transforming brands. I’m confident he will take Ascena to the next level.”
In more recent seasons, Jaffe led efforts to leverage the size of the company to create efficiencies and new capabilities, as the company has been battling sluggish sales trends and tough competition.
Kate Buggeln, lead independent director of the Ascena Retail Group, credited Jaffe with building “solid organizational and functional capabilities as well as a deep executive bench.”
In an emotional letter sent to employees on Wednesday, Jaffe wrote, “We have been faced with challenging times over the recent past. We are in a dynamic industry that requires continual change. And that is exactly what we are doing; we are transforming and progressing every day. I am 100 percent certain that we are on the right path and that we will see meaningful progress in both the near and long term. The simple fact is, as Ascena evolves, so must our leadership — and that starts with me. If there is one thing I want you to take away from this message it is this: my retirement is in no way a reflection of the unwavering confidence I have in Ascena and its future.”
Jaffe also spoke emotionally about his father. “Two of the greatest lessons I learned from my father are that for any organization to grow and succeed, you can’t be afraid to embrace new ideas and sometimes it takes others to effectuate that change. I remember how difficult it was for my father to turn the reins over to me in 2002 when we were transforming Dressbarn. As challenging as it was, he knew that the best thing for the brand was a set of fresh eyes. The same holds true now. I know my dad is proud that he has taught me so well.”
Muto, also speaking exclusively to WWD, spoke of the opportunities for Ascena in its turnaround efforts. “Brand by brand, some have more developed e-commerce businesses like Loft and Ann Taylor along with Lane Bryant. Dressbarn is probably the least developed.
“More importantly, the focus is about growing profitable top-line sales. We are in the brand business. It’s about differentiated product and great customer experience. We have spent a lot of time over the last year working on a strategic roadmap, brand by brand, looking at brand positioning, the competition. We have also spent a lot of time on consumer insights. Now it’s about flawless execution.”
Muto also said Ascena has shared services, capable leadership and synergies that come from being a large company at its disposal to help drive strategies. He also cited advanced analytics. “Data is fine, but what are the insights that can drive the strategy and the actions we take. That is critical.”
“This is a complex company. How do we simplify what we do. Agility is paramount. We need to move. Our time is now. We know who our customer is. We have learned a lot.”
Jaffe said he will still be on the board. “I’m not going far, but I am taking a backseat to be here and support Gary as an adviser, not as an active manager. What gives me comfort is that we have working together for four years, specifically working on succession for the last two. This is a highly natural succession.”
Muto, a seasoned specialty retailer, joined the Ann Inc. unit of Ascena in 2008 as president of Loft. In 2013, he assumed responsibility for leading the Ann Taylor, Loft and Lou & Grey brands. In August 2017, he was promoted to president and ceo of Ascena brands. Between 1998 and 2007, Muto held several leadership roles at Gap Inc., including president of Banana Republic and president of Gap brands. While at Gap Inc., Muto also launched the specialty brand, Forth & Towne, which was discontinued.
Teffner has been a member of Ascena’s board since 2018, and until her appointment as interim executive chair, served as chair of the audit committee and as a member of the
compensation and stock incentive committee.
Jaffe began his retail career with Dressbarn in 1992 and spent 10 years learning the business. When he became president and ceo in 2002, he led the transition of Dressbarn from an off-price discount store to a lifestyle specialty store brand.
With that experience, Jaffe began to expand the company and led four acquisitions: Maurices in 2005, followed by Justice in 2009, Lane Bryant and Catherines in 2012 and Ann Inc. in 2015. Previously, Jaffe was general partner of Chemical Venture Partners, a private equity firm, and a portfolio manager at Merrill Lynch.
On Thursday, Jaffe and Muto will host a conference call for the entire organization at 10 a.m.