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Ascena Retail Group adds more omnichannel tactics to chase profit

December 6, 2016 02:01 PM
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Ascena Retail Group aims to reduce costs by $150 million by its fiscal 2019, and evolving the way consumers can interact with its brands online and in stores is part of its plans to accomplish that goal.

Ascena, whose retail banners include Dressbarn, Maurices, Lane Bryant, Catherines, Justice and, most recently, Ann Taylor and Loft, announced the cost-cutting initiative it dubbed Change for Growth, in October. Ascena bought Ann Inc. last year in a $2 billion deal.

Executives on the company’s fiscal Q1 analyst call last week provided more details on their progress and some of the omnichannel programs the company is implementing across its brands to enhance profitability. 

“[We] have a clear line of sight to the $150 million cost-reduction target,” said David Jaffe, Ascena Retail Group CEO. This includes evaluating the company’s store fleet and making sure stores have omnichannel capabilities. Ascena began transitioning its store brands onto a single, omnichannel operating platform earlier this year and Justice and Maurices have transitioned completely. The company expects to move Lane Bryant, Catherine’s and Dressbarn onto the platform in 2017. An inquiry to Ascena about the platform was not immediately returned. Ascena Retail Group is No. 76 in the Internet Retailer 2016 Top 500 Guide.

“This new capability allows our customers to better access our brands where and how she wants, and we look forward to continue enhancements to the platform,” Jaffe said.

Online sales, which Ascena refers to as direct sales, continue to grow, although the company did not say how much. In the nine days tracked from the Sunday before Thanksgiving through Cyber Monday, it says total comparable sales were up 2% even though store traffic was down. “Double-digit e-commerce growth over this period more than offset negative brick-and-mortar performance that resulted from continued traffic headwinds,” Jaffe said.

Ascena continues to add the ability to buy online and pick up orders for free in stores to more stores. The company says such capabilities help drive store traffic and ease return costs. For the Lane Bryant apparel brand for plus-size women, more than 50% of LaneBryant.com orders are picked up in stores.

The company also is working to leverage its enterprise-wide inventory. This spring it will equip store associates with mobile sales devices so they can show products available for sale online to shoppers in Lane Bryant, Catherine’s and Dressbarn stores.

As of the end of October, Ascena operated 4,920 stores. Executives say the company is working with consulting firm Accenture to analyze store placement and performance to address profitability. “We recognize that stores play a critical role in the future with omnichannel. And at the same time, there is probably an opportunity to be more profitable with less,” Jaffe said, according to a transcript from Seeking Alpha. In an earnings call earlier this year, Jaffe said Ascena is not pushing to open new stores in 2017.

The company can see the store influence on web sales and vice versa. Jaffe said when Ascena opens a new store, online sales in that market go up. The reverse also is true.

For the quarter ended Oct. 29, Ascena Retail Group reported:

  • $1.678 billion in total sales, up 0.36% from $1.672 billion a year earlier.
  • Net income of $14.4 million, up from a loss of $18.1 million.
 

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