Ascena Continues with Strategic Transformation, Struggles Remain

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Ascena Continues with Strategic Transformation, Struggles Remain

By Tim Denman - 10/16/2017

As the apparel segment continues to feel the strain from thinning foot traffic and increased online competition, Ascena Retail Group is searching for ways to increase operational efficiencies across the chain and reevaluating its merchandising mix.

Ascena is firmly implanted in the apparel market operating numerous well-known clothing retailers including: Ann Taylor, Loft, Lane Bryant, Dressbarn, Justice and others. While Ascena sports an impressive brand portfolio, it is not immune to the slumping apparel market, seeing comp sales drop by 4% in Q4 2017.

While sales continue to drop, Ascena is looking for ways to align its collection of brands to gain operational efficiencies and cost savings.

“I’m encouraged by the major decisive actions that our team has taken across all aspects of our business,” David Jaffe, president CEO, Ascena Retail Group said on a recent earning call with analysts. “While we’re aggressively transforming our company, the environment clearly remains challenging and the disruption of traditional operating models has caused us to reexamine all areas of our business.

“We have moved decisively with our transformational program. We’ve delivered aggressive cost reductions to support our bottom line and are bringing leading edge capabilities to our brands in support of customer experience.”

As an operator of numerous brands, Ascena has many balls in the air and must juggle its transformation efforts across the chain.

 “We are working to meaningfully alleviate the experience we deliver to our customers to better deliver value in the context of an omnichannel merchandise experience,” said Gary Muto, president and CEO, Ascena Brands. “At the macro level, we’ve seen a shift in our customers’ appetite for fashion. Demand for novelty and newness is evident in each of our segments. We’ve improved production cycle times in all brands and can more effectively chase new items and replenish best sellers.”

On the earning call, the executive team gave a quick update on some of the changes taking place at the individual brands. Below is a short synonymous:

Ann Taylor. In May 2015, Ascena acquired Ann Taylor and has been working diligently over the past two years to realize operational efficientcies.

“There is substantial amount of gross margin savings that are coming out of putting Ann on to the Ascena supply chain platform,” said Brian Lynch, president and COO, Ascena Retail Group. “We’re pleased with it, but all segments need to get more traffic, they need to drive more sales.”

The brand is an Ascena standout and continues to perform well, and will launch a plus-sized line for spring 2018.

Dressbarn. Starting with its fall assortment Dressbarn has revamped its merchandising approach, attempting to go upscale while keeping a keen eye on the price value equation. “We believe we’ve meaningful opportunity to reactivate lost customers with our new fashion, supported by lifestyle shops that reinforce the versatility of our assortment,” said Muto.

Maurices. The merchandising revamp continues at Maurices, as the brand looks to increase its plus size assortment and shift to a more fashion and novelty approach.

Cacique. Ascena continues to invest in it Cacique Intimates brand and has plans to develop intimate lines across its family of brands.

“Cacique is a powerful brand and major growth vehicle for the segment,” said Muto. “Representing a differentiated and compelling product offering in the plus market.”

Justice. The brand has adjusted its marketing mix to appeal to both young girls and moms and it has produced impressive dividends. “We continue to see positive store traffic,” said Muto.  “Which suggest customers are responding to the strategic shifts we made to our marketing outreach programs.