Ascena Retail FY 4Q16 Earnings Call Notes

Ascena Retail Group’s (ASNA) CEO David Jaffe on Q4 2016 Results

The world is a different place than it was when we made our comp assumptions

” let me just, at a high level to say that, when we made that assumption or that guidance or those goals, I think the world is a little bit of a different place. I think what we are seeing specifically [indiscernible] is a very cautious consumer, with respect to apparel spending. And all of you are smart guys and read all the same articles and the reports that I do. It’s tough out there. There is no question that the female apparel shopper has pulled back. We have all seen the reports and so we can’t really put our finger on what it is that has brought her back from where she was, in terms of her spending. And as we look out, we keep [indiscernible] and saying are these trends secular or cyclical, and I wanted to think that they were simply timing issues. It was very cyclical, and it would come back. And what we saw this season is, maybe some of it is a little secular. And so we are trying to rebalance our business model to understand and incorporate those changes that we are seeing from our customer.”

Not clear that stores don’t still have a role

“So I will go first on the second question, and that’s a really tough one, because as we develop our omnichannel model, Dana, we think that our stores still have a role. So the easy answer is, oh shut all your stores and move everything online. I don’t know if that’s the right answer. So we are developing better systems, better analysis that will enable us to understand the impact that a store has in a market on omnichannel sales, online sales and vice versa. So just to give you a quick kneejerk, when we open up a new store, we find that our online sales in that market go up. So that’s important information. So what happens is when we close a store in the market, do they go down, can we transfer some of those store sales online. So that’s the analysis that we are working through, and we will use that to help us determine how many stores we need in a particular market, and by inference in the fleet.”

Robb Giammatteo

Don’t think we should be materially impacted by Hanjin

“And Dana, your question on Hanjin; we have no direct relationship with Hanjin for our Ascena Global Sourcing Network; so pretty modest exposure. There are some relationships Hanjin has with other operators with alliances. But we think our direct source business is relatively isolated, and not going to be impacted materially.”

Ascena Retail Group FY 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

A challenging specialty retail environment

“During the quarter, we saw the challenging specialty retail environment continue with soft traffic across all our brands. While we achieved our planned profitability for the quarter, sales were below our expectation, down roughly 1% to last year, with store comps down 4%, offset partially by continued positive ecommerce comp of 13%.”

shifting away from traditional promotional strategies to more targeted marketing

“From a marketing perspective, we’ve begun to see customer response shifting away from traditional promotional strategies like storewide percent off and regular bounce back programs. We’re testing more targeted marketing to specific customer segments aimed at growing share walks in cross category engagements. Examples of this include focused programs in our best ad denim and bra categories.

We’ll also focus on broadening our marketing investments to better reach both prospective and inactive customers, including more direct mail that goes to these groups and a significant digital marketing initiative and expanded the office.”

We don’t think the environment has improved

“When we think about the first quarter, as we mentioned, there are still some headwinds with traffic that we don’t see the environment has having markedly improved…at the end of the day, we are really subject to the winds of the consumer and not that I want to pull a lot of phasing in this consumer right now.”

We are not looking to reduce our store count

“I think there is a sense in the market, that, oh, everybody is cutting back stores, they only need half as many stores in the fleet that they have. And if you are a hard good guy, like some of the office guy, office supply superstores, I get it, because half of their business is being done online and it’s a commodity product. I mean, I guess, that, they don’t need these big stores, they don’t need this many.

Our stores are small. The Justice stores are like 9,000 to 4,000 feet, maurices stores are 5,000, et cetera, et cetera. So we are not looking to reduce our stores or reduce the number of stores, because apparel — fashion apparel is still about that touch and feel, and as we had omni-channel capabilities, they become fulfillment center, they become a pick-up center and we think that across all of our brands that there is going to be an ongoing need for the store base that we have in all of our brands”