Ascena Retail Group Inc. recently released its 2017 annual report and the news wasn’t good. Sales were off 4.9% from 2016 and all of its four reporting segments showed a decline year-over-year with plus and kids fashion off the most, both down 7.5%. In response to its failing fortunes in retail, it plans to close 250 retail locations by July 2019 and seek rent concessions for 400 more stores, otherwise they will follow suit, as reported by the Los Angeles Times. During the fourth quarter it closed 56 stores.
The company hasn’t yet announced which brands from among its portfolio of Premium Fashion (Ann Taylor, LOFT), Value Fashion (maurices, dressbarn), Plus Fashion (Lane Bryant, Catherines), or Kids Fashion (Justice) will be shuttered, but throughout 2017 its Premium Fashion segment outperformed the rest of its portfolio, only down .4%. However in the fourth quarter even Premium Fashion charted a 3% decline.
Having acquired the Ann Taylor and LOFT brands in 2015, they are the jewel in Ascena’s crown. These brands have more status in the mid-priced fashion world, though even before the acquisition the ANN brands were suffering. At the time Ascena was counting on synergies among its portfolio of brands and looked to save $150 million over three years.
Instead the company has invested $300 million in a “multi-year technology and infrastructure investment cycle” to develop an “efficient supply chain and foundational omni-channel platform.” Sounds good, and the company’s guidance promises to double that previous goal of savings to be realized from $150 to $300 million by fiscal 2019. But those savings aren’t going to help the company realize any revenue growth, which is what the company desperately needs.
With the Ascena brands distributed widely across a range of customer fashion needs – career, casual lifestyle, discount/value, plus and children’s – it should be able to cover fashion missteps in one segment with appropriate offerings in others. But such is not the case. With all brands failing, both online and in-store, the company needs to look first to align its fashion selections with the tastes of its target customers.
Full disclosure: I haven’t personally shopped in all the Ascena brands, though I am very familiar with Ann Taylor and LOFT. I am not plus sized so I haven’t shopped Lane Bryant for myself, though I have shopped there for my 80-year old mother, which in itself says volumes about that brand. So let’s look more closely at what Ascena needs to do to become relevant to the customers it needs.