Ascena Retail Group (formerly Dress Barn, Inc.) has left the farm for greener -- but not leaner -- retail pastures. The apparel and accessories retailer operates about 3,900 specialty stores throughout the US, Puerto Rico, and Canada. Its 825 Dress Barn stores cater to women ages 35 to 55. Maurices, with some 875 locations, targets 17-to-34-year-old females in small towns with populations between 25,000 and 100,000. Its Justice chain courts "tweens" at 970 stores and online. Its newly-acquired Charming Shoppes subsidiary operates the plus-size Lane Bryant and Catherines Plus Sizes apparel chains. Founded as Dress Barn in 1962, the company changed its name to Ascena Retail Group in 2011.
Ascena Retail Group's 3,900 specialty store are located in 48 US states, the District of Columbia, Puerto Rico, and Canada. The Justice and Maurices chains operate 23 stores and 15 stores in Canada, respectively. While more are planned, they contribute an insignificant amount of sales at present.
Justice is the company's largest retail chain, accounting for 30% of fiscal 2013 (ended July) sales. Lane Bryant, Dress Barn, and Maurices each contribute around 20% of sales, while Catherines rings up the remainder. Each chain has an online incarnation.
Sales and Marketing
Ascena Retail employs a variety of advertising and marketing strategies across its five retail brands. The company engages in customer research, promotional events, window and in-store marketing materials, as well as direct mail, online, and magazine advertising. In fiscal 2013 (ends July), the company spent $169 million on advertising and marketing, more than twice the $81.5 million spent the previous year.
Group sales jumped 41% in fiscal 2013 (ended July) compared with the prior year, to $4.7 billion. Most of the sales growth was driven by the acquisition of Charming Shoppes. Maurices and Justice each posted annual sales gains of nearly 8%, resulting from increasing same-store sales and new store openings at Justice, and the addition of new Maurices stores. The laggard was Dress Barn, which posted a 2% decline in sales on a smaller store count and 4% drop in same-store sales. The group's e-commerce sales totaled approximately $400 million in fiscal 2013, an increase of about 33% over 2012. Overall, fast-growing Ascena has seen its sales more than triple since fiscal 2009, from about $1.5 billion to $4.7 billion.
Net income declined by 7% in fiscal 2013 versus the prior year, to about $151 million, while cash flow from operations continued its steady climb. The company blamed increased buying, distribution, and occupancy costs, acquisition-related expenses, and a loss on extinguishment and interest expenses, for the profit decline.
Ascena Retail Group mines different retail niches, including younger women (ages 17 to 34), tween (ages seven to 14) girls, and now plus-size females (sizes 12 to 32) through its various retail brands. Acquisitions are key to the holding company's successful growth strategy, such as Charming Shoppes (in 2012) and Justice (2009). Concurrently, the company is working to right-size its store network, closing underperforming Dress Barn locations, and adding Maurice's shops and Justice stores, including locations in Canada, in fiscal 2013. Going forward, the company plans to open between 55 and 75 new stores across all of its brands as it continues its expansion in the US and Canada.
To control costs and increase efficiency, Ascena Retail has centralized certain distribution center, information technology, and payroll procession operations. It is also working to consolidate certain of its financial systems and processes across it five retail brands.
Mergers and Acquisitions
Acquisitive Ascena Retail purchased Charming Shoppes for about $900 million in June 2012. With more than 1,800 stores (and related e-commerce sites) under the Lane Bryant, Catherines Plus Sizes, and Fashion Bug banners, Charming Shoppes offered Ascena entry to the burgeoning plus-size market. It plans to focus on the Lane Bryant and Catherines brands, while shutting down Fashion Bug and divesting the Figi's gift business. Indeed, in 2013 the group sold Figi's to Mason Companies and used the proceeds to reduce debt.