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Ascena Looks At Inventory Refresh To Rebound From Poor Quarter

Ascena Looks At Inventory Refresh To Rebound From Poor Quarter

Ascena Retail Group reported a $354 million operating loss in Q4 2019, led by a 4% same-store sales decline in its Plus Fashion division and a 5% drop in Kids Fashion. However, these losses were somewhat offset by 1% same-store sales growth in the Premium Fashion division, and a 12% increase at Dressbarn as the chain winds down.

While the troubled retailer is looking at multiple options to turn its fortunes around, executives said that a bankruptcy filing is not on the table. Ascena plans instead to reposition some ailing brands and build on the momentum of successful ones.

“The company continues to consider options to optimize its balance sheet and liquidity from a position of strength,” said Carrie Teffner, Interim Executive Chairman at Ascena during an earnings call. “We have large iconic brands and a business with significant liquidity. Of the options being considered, to be clear and for the avoidance of doubt, bankruptcy of Ascena is not one of the options being evaluated.”

Efforts to clear out inventory across all three businesses in preparation for turnaround efforts were blamed for some of the sales declines. Clearing inventory is expected to help Ascena improve the fortunes of the Plus division, where the company will put a greater emphasis on inclusiveness as a differentiator. This will encompass offering an enhanced merchandise assortment and top-quality customer service to help customers find clothes that fit well.

The company has high hopes for Kids as well — while this segment of the business suffered from a steep sales decline in Q4 2019, same-store sales previously rose 15% in Q4 2018. Clearing out excess inventory is expected to help Justice stock a fresh product assortment, including more toned-down styles.

Heavy promotional activity also was blamed for keeping gains in the Premium division to a minimum, but this process is expected to improve versatility going forward. In particular, it will help Ann Taylor shift its perception “away from wear-to-work towards more wear in occasions relevant to her lifestyle,” according to CEO Gary Muto.

“We are pleased to see the work we are doing to provide versatility in our assortment is being well received,” said Muto. “We believe this shift in our merchandising strategy, combined with our flexibility to keep pace with her changing desires, positions us to deepen our customer loyalty with existing customers, re-engage lapsed customers and attract new customers to the brand.”

These inventory revamps will be partnered with a fresh analytics effort that will use customer profiles to ensure that the product assortment is relevant and compelling for every season. Ascena also is in the early stages of improving its personalization capabilities, which will help the retailer better engage with shoppers and offer an improved omnichannel customer experience.

Some of the relevant data will come from the company’s customer loyalty program, which has been expanded in the Premium and Plus segments. Ascena expects these programs to draw in new customers, improve loyalty among existing shoppers and increase the retailer’s share of wallet.

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