ascena retail group, inc.
(Nasdaq - ASNA)
(“ascena” or the “Company”) today reported financial results for
its fiscal fourth quarter and year ended August 3, 2019.
Fourth Quarter Highlights:
- Comparable sales were flat;
- Operating loss was $354 million, which primarily reflects
non-cash impairments of goodwill and intangible assets recorded in
Fiscal 2019, as well as restructuring costs; adjusted operating
income, excluding the non-cash impairment charges and other items
as detailed in Note 2, was $16 million;
- Divestiture of maurices completed;
- Dressbarn wind down progressing well and on
track to complete store closures in December 2019;
- Returned to normalized inventory levels, well positioned for
holiday season;
- Cash and revolver availability of $725 million; compliant with
all covenants; and
- Two new independent members appointed to the Board of Directors
to expand expertise.
Carrie Teffner, Interim Executive Chair of ascena, commented,
“We made pivotal changes in the back half of Fiscal 2019 as we
exited our Value Fashion segment to focus on our
brands where we see the biggest profitability potential. Our Board
and executive team continue to actively assess the portfolio as we
remain laser focused on our key objective of returning to
sustainable growth, improving operating margins and optimizing our
capital structure as we remain committed to enhancing shareholder
value.”
Gary Muto, Chief Executive Officer of ascena, commented, "We
were pleased to have exceeded our adjusted operating income
expectations for the fourth quarter through better than expected
comparable sales results and lower operating expenses. In addition,
we ended the quarter with a strong cash and liquidity position with
no borrowings under our credit facility."
Mr. Muto continued, "Looking ahead, by shifting our focus to our
brands and right-sizing our cost structure, we plan to capitalize
on the meaningful and differentiated presence our brands have in
the marketplace. We are evolving our merchandising strategy to
incorporate greater versatility in our assortment while maintaining
flexibility to keep pace with her changing desires in order to
deepen loyalty with existing customers, reengage lapsed customers
and attract new customers. In addition, we are taking steps to
enhance our cash position over the course of Fiscal 2020 through a
combination of cost saving initiatives, rationalization of our
capital expenditures and disciplined working capital management. We
are excited by the opportunities that lie ahead as we position
ourselves to deliver long term profitable growth and enhance
shareholder value.”
Fiscal Fourth Quarter Results -
Consolidated
OverviewCurrent and prior year results include
items that the Company does not believe reflect the fundamental
performance of its business. The following commentary reflects
results from the Company's continuing operations that exclude its
maurices brand, which has been classified as a
discontinued operation. More information is provided in the Notes
to the unaudited condensed consolidated financial information,
which is included herein on pages 11 through 16.
Net sales and comparable salesNet sales for the
fourth quarter of Fiscal 2019 were $1,454 million compared to
$1,520 million in the year-ago period. Net sales primarily reflect
flat comparable sales for the quarter and the unfavorable impact
resulting from the 53rd week recorded in the prior fiscal year.
The Company's comparable and net sales data are summarized
below:
|
|
|
|
Net Sales (millions) |
|
|
ComparableSales |
|
Three Months Ended |
|
|
|
August 3,2019 |
|
August 4,2018 |
|
Ann Taylor |
—% |
|
$ |
190.5 |
|
|
$ |
193.9 |
|
|
LOFT |
2% |
|
440.2 |
|
|
426.5 |
|
|
Premium
Fashion |
1% |
|
630.7 |
|
|
620.4 |
|
|
|
|
|
|
|
|
|
Lane Bryant |
(3)% |
|
265.7 |
|
|
294.5 |
|
|
Catherines |
(8)% |
|
72.1 |
|
|
88.0 |
|
|
Plus
Fashion |
(4)% |
|
337.8 |
|
|
382.5 |
|
|
|
|
|
|
|
|
|
Justice |
(5)% |
|
259.0 |
|
|
277.5 |
|
|
Kids
Fashion |
(5)% |
|
259.0 |
|
|
277.5 |
|
|
|
|
|
|
|
|
|
Dressbarn |
12% |
|
226.7 |
|
|
239.1 |
|
|
Value
Fashion |
12% |
|
226.7 |
|
|
239.1 |
|
|
|
|
|
|
|
|
|
Total
Company |
—% |
|
$ |
1,454.2 |
|
|
$ |
1,519.5 |
|
Excluding Dressbarn, the Company's comparable
sales for the fourth quarter of Fiscal 2019 was (2)%.
Gross marginGross margin decreased to $789
million, or 54.3% of sales, for the fourth quarter of Fiscal 2019,
compared to $882 million, or 58.1% of sales in the year-ago period.
The decline in gross margin rate from the fourth quarter last year
was primarily due to higher promotional activity to address
elevated inventory levels.
Buying, distribution, and occupancy
expensesBuying, distribution, and occupancy (“BD&O”)
expenses for the fourth quarter of Fiscal 2019 decreased to $275
million, which represented 18.9% of sales, compared to $291
million, or 19.2% of sales in the year-ago period. In terms of
dollars, the reduction in expenses was driven by lower occupancy
expenses resulting primarily from the fleet optimization program
and lower buying expenses reflecting lower compensation-related
costs.
Selling, general, and administration
expensesSelling, general, and administrative (“SG&A”)
expenses for the fourth quarter of Fiscal 2019 decreased 8% to $421
million, or 28.9% of sales, compared to $459 million, or 30.2% of
sales in the year-ago period. The decrease in SG&A expenses was
primarily due to lower store expenses resulting from the fleet
optimization program, savings from the cost reduction initiatives,
mainly reflecting headcount and non-merchandise procurement
savings, and the favorable impact resulting from the 53rd week
recorded in the prior fiscal year. These items were partially
offset by inflationary increases and a non-cash write-off of
corporate-related fixed assets.
Operating resultsOperating loss for the fourth
quarter of Fiscal 2019 was $354 million compared to operating
income of $32 million in the year-ago period, and primarily
reflects non-cash impairments of goodwill and intangible assets
recorded in Fiscal 2019, the gross margin rate declines discussed
above, and higher restructuring costs. Excluding the non-cash
impairment charges and other items as detailed in Note 2, operating
income for the quarter was $16 million.
Provision for income taxes from
continuing operationsFor the fourth quarter of Fiscal
2019, the Company recorded a tax expense of $29 million on a
pre-tax loss of $379 million. The effective tax rate of (7.7)% was
lower than the statutory tax rate primarily due to non-deductible
impairments of goodwill, a partial federal valuation allowance, and
the impact of GILTI.
Net loss and Loss per
diluted shareThe Company reported a Net loss from
continuing operations of $420 million, or $2.12 per diluted share
in the fourth quarter of Fiscal 2019, compared to Net income from
continuing operations of $16 million, or $0.08 per diluted share,
in the year-ago period. Excluding the non-cash impairment charges
and other items as detailed in Note 2, the net loss from continuing
operations for the quarter would have been $25 million, or $0.13
per share.
Fiscal Fourth Quarter Balance Sheet
Highlights
Cash and cash equivalentsThe Company ended the
fourth quarter of Fiscal 2019 with Cash and cash equivalents of
$328 million.
InventoriesThe Company ended the fourth quarter
of Fiscal 2019 with inventory of $548 million, up 2% from the
year-ago period. The Company took meaningful steps in the fourth
quarter to bring inventories back in line while improving quality
and composition.
Capital expendituresCapital expenditures
totaled $32 million in the fourth quarter of Fiscal 2019, primarily
to support new capabilities and strategic initiatives.
DebtThe Company ended the fourth quarter of
Fiscal 2019 with total debt of $1,372 million, which represents the
balance remaining on the term loan. There were no borrowings
outstanding under the Company's revolving credit facility at the
end of the fourth quarter of Fiscal 2019 and the Company had $397
million of borrowing availability under its revolving credit
facility. The Company is not required to make its next quarterly
term loan payment of $22.5 million until November of calendar
2020.
Board of Directors Appointments
Ascena’s Board of Directors appointed two new independent
directors, Gary Begeman and Paul Keglevic. Mr. Begeman has served
as General Counsel of NII Holdings for several years and previously
held senior positions at Sprint and Nextel Communications. He has
also served as a non-executive director of a number of
privately-owned companies. Mr. Keglevic has served as Chief
Executive Officer, as well as Chief Restructuring Officer of Energy
Future Holdings. He has also served as Executive Vice President,
Chief Financial Officer and Chief Risk Officer at TXU Corporation.
Both Gary and Paul bring significant financial and operational
expertise with long track records of helping companies enhance
value for stakeholders.
First Quarter and Full Year Fiscal Year 2020
Outlook
Due to volatility expected in total consolidated results related
to the ongoing wind-down of its Dressbarn brand,
the Company is providing guidance for the first quarter of Fiscal
2020 for the consolidated continuing operations of the
Premium Fashion, Plus Fashion,
and Kids Fashion segments as follows:
- Net sales of $1.100 to $1.125 billion;- Comparable sales of
negative low single digits;- Gross margin rate of 59.3% to 59.8%;-
Depreciation and amortization of approximately $61 million; and-
Adjusted operating income of $15 million to $35 million.
In addition, for the full year, total capital spending is
expected to be between $80 million and $100 million, which
represents a significant decrease compared to prior years.
Real Estate
The Company's store information on a brand-by-brand basis for
the fourth quarter is as follows:
|
Quarter Ended August 3, 2019 |
|
Store LocationsBeginning of Q4 |
Store LocationsOpened |
Store LocationsClosed |
Store LocationsEnd of Q4 |
Justice |
831 |
— |
(5) |
826 |
Lane
Bryant |
731 |
— |
(10) |
721 |
LOFT |
670 |
1 |
(2) |
669 |
Dressbarn |
661 |
— |
(45) |
616 |
Catherines |
332 |
— |
(12) |
320 |
Ann
Taylor |
294 |
— |
(1) |
293 |
Total |
3,519 |
1 |
(75) |
3,445 |
The above table excludes store count related to
maurices, which was sold early in the fourth
quarter of Fiscal 2019.
Conference Call Information
The Company will conduct a conference call today, October 3,
2019, at 4:30 PM Eastern Time to review its fourth quarter and full
year Fiscal 2019 results, followed by a question and answer
session. Parties interested in participating in this call should
dial in at (877) 407-3982 prior to the start time, the conference
ID is 13694543. The call will also be simultaneously broadcast at
www.ascenaretail.com. A recording of the call will be available
shortly after its conclusion and until October 17, 2019 by dialing
(844) 512-2921, the conference ID is 13694543, and until November
3, 2019 via the Company’s website at www.ascenaretail.com.
Non-GAAP Financial Results
As noted above, the comparability of the Company's operational
results for the periods presented herein has been affected by
certain transactions. The Company believes that non-GAAP financial
measures, when reviewed in conjunction with GAAP financial
measures, can provide more information to assist investors in
evaluating current period performance, trends and
period-over-period comparative results. Non-GAAP measures eliminate
amounts that do not reflect the fundamental performance of the
Company’s businesses. These items include costs such as (i)
impairments of goodwill and other intangible assets, (ii) costs
associated with the wind down of its Dressbarn
operations, (iii) restructuring, tangible asset impairments and
other related charges including, but not limited to, charges
incurred under the Company's cost reduction initiatives, and (iv)
the impact of adopting the Tax Reform Act of 2017. Additionally,
the GAAP results for Fiscal 2018 reflect an additional week that
was recorded by the Premium
Fashion segment during the second quarter and the
other segments during the fourth quarter. Reference is made to
Notes 1 and 2 of the unaudited condensed consolidated financial
information included herein for more information and a complete
listing of such adjustments.
Many investors also use non-GAAP measures as a common basis for
comparing the performance of different companies. A general
limitation of non-GAAP measures is that they are not prepared in
accordance with U.S. generally accepted accounting principles and
may not be comparable to similarly titled measures of other
companies due to differences in methods of calculation and excluded
items. Non-GAAP measures should be considered in addition to, not
as a substitute for, the Company’s Operating income and Net income
per common share, as well as other measures of financial
performance and liquidity reported in accordance with U.S.
generally accepted accounting principles.
Additionally, a reconciliation of the projected non-GAAP
operating income, which is a forward-looking non-GAAP financial
measure, to operating income, the most directly comparable GAAP
financial measure, is not provided because the Company is unable to
provide such reconciliation without unreasonable effort. The
inability to provide a reconciliation is due to the uncertainty and
inherent difficulty predicting the occurrence, the financial impact
and the periods in which the non-GAAP adjustments may be
recognized. These GAAP measures may include the impact of such
items as restructuring charges, costs associated with the wind down
of Dressbarn, and the tax effect of all such
items. As previously stated, the Company has historically excluded
these items from non-GAAP financial measures. The Company currently
expects to continue to exclude such items in future disclosures of
non-GAAP financial measures and may also exclude other items that
may arise (collectively, “non-GAAP adjustments”). The decisions and
events that typically lead to the recognition of non-GAAP
adjustments are inherently unpredictable as to if or when they may
occur. For the same reasons, the Company is unable to address the
probable significance of the unavailable information, which could
be material to future results.
Forward-Looking Statements
Certain statements made within this press release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to certain risks and uncertainties that
could cause actual results to differ materially. Forward-looking
statements are statements related to future, not past, events, and
often contain words such as “expect,” "anticipate," "intend,"
"plan," "believe," "seek," "see," "will," "would," “estimate,”
“forecast,” "target," “preliminary,” or “range,” and include,
without limitation, the Company’s outlook for the first quarter and
full year of Fiscal 2020, and risks associated with the ability to
achieve a successful outcome for its portfolio brands and to
otherwise achieve its business strategies. The Company does not
undertake to publicly update or review its forward-looking
statements even if experience or future changes make it clear that
its projected results expressed or implied will not be achieved.
Detailed information concerning a number of factors that could
cause actual results to differ materially from the information
contained herein is readily available in the Company’s most recent
Annual Report on Form 10-K.
About ascena retail group, inc.
ascena retail group, inc. (Nasdaq: ASNA) is a national
specialty retailer offering apparel, shoes, and accessories for
women under the Premium Fashion (Ann
Taylor, LOFT, and Lou &
Grey), Plus Fashion (Lane
Bryant, Catherines and
Cacique), and Value Fashion
(Dressbarn) segments, and for tween girls under
the Kids Fashion segment
(Justice). ascena retail group, inc. through its
retail brands operates ecommerce websites and approximately 3,400
stores throughout the United States, Canada and Puerto
Rico.
For more information about ascena retail group, inc. visit:
ascenaretail.com, AnnTaylor.com, factory.anntaylor.com, LOFT.com,
outlet.loft.com, louandgrey.com, lanebryant.com, Catherines.com,
Dressbarn.com, and shopjustice.com.
CONTACT: |
For investors: |
For media: |
|
ICR, Inc. |
ascena retail group, inc. |
|
Jean Fontana |
Shawn Buchanan |
|
Managing Director |
Corporate Communications |
|
(646) 277-1214 |
(212) 541-3418 |
|
Jean.Fontana@icrinc.com |
shawn_buchanan@anninc.com |
|
|
|
|
Jessica Schmidt |
|
|
Senior Vice President |
|
|
(646) 677-1806 |
|
|
Jessica.Schmidt@icrinc.com |
|
ascena retail group, inc.Condensed
Consolidated Statements of Operations
(Unaudited)(millions, except per share
data)
|
Three Months Ended |
|
August 3,2019 |
|
% of NetSales |
|
August 4,2018 |
|
% of NetSales |
Net sales |
$ |
1,454.2 |
|
|
100.0 |
% |
|
$ |
1,519.5 |
|
|
100.0 |
% |
Cost of goods sold |
(665.0 |
) |
|
(45.7 |
)% |
|
(637.2 |
) |
|
(41.9 |
)% |
Gross
margin |
789.2 |
|
|
54.3 |
% |
|
882.3 |
|
|
58.1 |
% |
Other costs and
expenses: |
|
|
|
|
|
|
|
Buying, distribution and occupancy expenses |
(275.4 |
) |
|
(18.9 |
)% |
|
(291.3 |
) |
|
(19.2 |
)% |
Selling, general and administrative expenses |
(420.5 |
) |
|
(28.9 |
)% |
|
(458.6 |
) |
|
(30.2 |
)% |
Restructuring and other related charges |
(98.6 |
) |
|
(6.8 |
)% |
|
(17.7 |
) |
|
(1.2 |
)% |
Impairment of goodwill |
(160.9 |
) |
|
(11.1 |
)% |
|
— |
|
|
— |
% |
Impairment of other intangible assets |
(109.9 |
) |
|
(7.6 |
)% |
|
— |
|
|
— |
% |
Depreciation and amortization expense |
(77.7 |
) |
|
(5.3 |
)% |
|
(82.7 |
) |
|
(5.4 |
)% |
Operating (loss)
income |
(353.8 |
) |
|
(24.3 |
)% |
|
32.0 |
|
|
2.1 |
% |
Interest expense |
(26.9 |
) |
|
(1.8 |
)% |
|
(30.8 |
) |
|
(2.0 |
)% |
Interest income and other
income, net |
1.5 |
|
|
0.1 |
% |
|
0.3 |
|
|
— |
% |
Loss on extinguishment of
debt |
— |
|
|
— |
% |
|
(5.0 |
) |
|
(0.3 |
)% |
Loss from continuing
operations before (provision) benefit for income
taxes |
(379.2 |
) |
|
(26.1 |
)% |
|
(3.5 |
) |
|
(0.2 |
)% |
(Provision) benefit for income
taxes from continuing operations |
(29.2 |
) |
|
(2.0 |
)% |
|
19.3 |
|
|
1.3 |
% |
Loss from equity method
investment |
(11.8 |
) |
|
(0.8 |
)% |
|
— |
|
|
— |
% |
(Loss) income from
continuing operations |
(420.2 |
) |
|
(28.9 |
)% |
|
15.8 |
|
|
1.0 |
% |
Discontinued
operations |
|
|
|
|
|
|
|
Income from discontinued
operations, net of tax |
17.7 |
|
|
1.2 |
% |
|
17.4 |
|
|
1.1 |
% |
Gain on disposal of
discontinued operations, net of taxes |
44.5 |
|
|
3.1 |
% |
|
— |
|
|
|
Net (loss)
income |
$ |
(358.0 |
) |
|
(24.6 |
)% |
|
$ |
33.2 |
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
Net (loss) income per
common share - basic: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(2.12 |
) |
|
|
|
$ |
0.08 |
|
|
|
Discontinued operations |
0.31 |
|
|
|
|
0.09 |
|
|
|
Total net (loss)
income per basic common share |
$ |
(1.81 |
) |
|
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share - diluted: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(2.12 |
) |
|
|
|
$ |
0.08 |
|
|
|
Discontinued operations |
0.31 |
|
|
|
|
0.09 |
|
|
|
Total net (loss)
income per diluted common share |
$ |
(1.81 |
) |
|
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
Basic |
198.0 |
|
|
|
|
196.3 |
|
|
|
Diluted |
198.0 |
|
|
|
|
199.2 |
|
|
|
See accompanying notes.
ascena retail group, inc.Condensed
Consolidated Statements of Operations
(Unaudited)(millions, except per share
data)
|
Twelve Months Ended |
|
August 3,2019 |
|
% of NetSales |
|
August 4,2018 |
|
% of NetSales |
Net sales |
$ |
5,493.4 |
|
|
100.0 |
% |
|
$ |
5,566.4 |
|
|
100.0 |
% |
Cost of goods sold |
(2,432.1 |
) |
|
(44.3 |
)% |
|
(2,334.1 |
) |
|
(41.9 |
)% |
Gross
margin |
3,061.3 |
|
|
55.7 |
% |
|
3,232.3 |
|
|
58.1 |
% |
Other costs and
expenses: |
|
|
|
|
|
|
|
Buying, distribution and
occupancy expenses |
(1,120.5 |
) |
|
(20.4 |
)% |
|
(1,149.5 |
) |
|
(20.7 |
)% |
Selling, general and
administrative expenses |
(1,783.7 |
) |
|
(32.5 |
)% |
|
(1,766.2 |
) |
|
(31.7 |
)% |
Restructuring and other
related charges |
(127.7 |
) |
|
(2.3 |
)% |
|
(76.6 |
) |
|
(1.4 |
)% |
Impairment of goodwill |
(276.0 |
) |
|
(5.0 |
)% |
|
— |
|
|
— |
% |
Impairment of intangible
assets |
(134.9 |
) |
|
(2.5 |
)% |
|
— |
|
|
— |
% |
Acquisition and integration
expenses |
— |
|
|
— |
% |
|
(5.4 |
) |
|
(0.1 |
)% |
Depreciation and amortization
expense |
(299.9 |
) |
|
(5.5 |
)% |
|
(323.5 |
) |
|
(5.8 |
)% |
Operating
loss |
(681.4 |
) |
|
(12.4 |
)% |
|
(88.9 |
) |
|
(1.6 |
)% |
Interest expense |
(107.0 |
) |
|
(1.9 |
)% |
|
(113.0 |
) |
|
(2.0 |
)% |
Interest and other income,
net |
3.4 |
|
|
0.1 |
% |
|
1.6 |
|
|
— |
% |
Loss on extinguishment of
debt |
— |
|
|
— |
% |
|
(5.0 |
) |
|
(0.1 |
)% |
Loss from continuing
operations before benefit for income taxes |
(785.0 |
) |
|
(14.3 |
)% |
|
(205.3 |
) |
|
(3.7 |
)% |
Benefit for income taxes from
continuing operations |
14.5 |
|
|
0.3 |
% |
|
62.3 |
|
|
1.1 |
% |
Loss from equity method
investment |
(11.8 |
) |
|
(0.2 |
)% |
|
— |
|
|
— |
% |
Loss from continuing
operations |
(782.3 |
) |
|
(14.2 |
)% |
|
(143.0 |
) |
|
(2.6 |
)% |
Discontinued
operations |
|
|
|
|
|
|
|
Income from discontinued
operations, net of taxes |
76.4 |
|
|
1.4 |
% |
|
103.3 |
|
|
1.9 |
% |
Gain on disposal of
discontinued operations, net of taxes |
44.5 |
|
|
0.8 |
% |
|
— |
|
|
— |
% |
Net loss |
$ |
(661.4 |
) |
|
(12.0 |
)% |
|
$ |
(39.7 |
) |
|
(0.7 |
)% |
|
|
|
|
|
|
|
|
Net (loss) income per
common share - basic: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(3.96 |
) |
|
|
|
$ |
(0.73 |
) |
|
|
Discontinued operations |
0.61 |
|
|
|
|
0.53 |
|
|
|
Total net loss per
basic common share |
$ |
(3.35 |
) |
|
|
|
$ |
(0.20 |
) |
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share - diluted: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(3.96 |
) |
|
|
|
$ |
(0.73 |
) |
|
|
Discontinued operations |
0.61 |
|
|
|
|
0.53 |
|
|
|
Total net loss per
diluted common share |
$ |
(3.35 |
) |
|
|
|
$ |
(0.20 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
Basic |
197.5 |
|
|
|
|
196.0 |
|
|
|
Diluted |
197.5 |
|
|
|
|
196.0 |
|
|
|
See accompanying notes.
ascena retail group, inc.Condensed
Consolidated Balance Sheets
(Unaudited)(millions)
|
|
|
|
August 3,2019 |
|
August 4,2018 |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
328.0 |
|
|
$ |
231.0 |
|
Inventories |
547.7 |
|
|
535.1 |
|
Prepaid expenses and other current assets |
279.3 |
|
|
229.4 |
|
Assets related to discontinued operations |
— |
|
|
401.3 |
|
Total current assets |
1,155.0 |
|
|
1,396.8 |
|
Property and equipment,
net |
847.0 |
|
|
1,106.8 |
|
Goodwill |
313.5 |
|
|
589.5 |
|
Other intangible assets,
net |
276.6 |
|
|
427.0 |
|
Non-current investments |
42.1 |
|
|
— |
|
Other assets |
65.6 |
|
|
50.4 |
|
Total
assets |
$ |
2,699.8 |
|
|
$ |
3,570.5 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
336.0 |
|
|
$ |
394.7 |
|
Accrued expenses and other current liabilities |
333.9 |
|
|
304.0 |
|
Deferred income |
128.3 |
|
|
108.4 |
|
Liabilities related to discontinued operations |
— |
|
|
166.2 |
|
Total current liabilities |
798.2 |
|
|
973.3 |
|
Long-term debt, less current
portion |
1,338.6 |
|
|
1,328.7 |
|
Lease-related liabilities |
234.2 |
|
|
260.8 |
|
Deferred income taxes |
0.6 |
|
|
2.6 |
|
Other non-current
liabilities |
177.2 |
|
|
206.6 |
|
Total
liabilities |
2,548.8 |
|
|
2,772.0 |
|
Equity |
151.0 |
|
|
798.5 |
|
Total liabilities and
equity |
$ |
2,699.8 |
|
|
$ |
3,570.5 |
|
See accompanying notes.
ascena retail group, inc.Segment
Information (Unaudited)(millions)
|
Three Months Ended |
|
Twelve Months Ended |
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Net sales (a)(b): |
|
|
|
|
|
|
|
Premium Fashion (c) |
$ |
630.7 |
|
|
$ |
620.4 |
|
|
$ |
2,415.1 |
|
|
$ |
2,317.8 |
|
Plus Fashion |
337.8 |
|
|
382.5 |
|
|
1,240.5 |
|
|
1,340.0 |
|
Kids Fashion |
259.0 |
|
|
277.5 |
|
|
1,079.1 |
|
|
1,100.0 |
|
Value Fashion |
226.7 |
|
|
239.1 |
|
|
758.7 |
|
|
808.6 |
|
Total net sales |
$ |
1,454.2 |
|
|
$ |
1,519.5 |
|
|
$ |
5,493.4 |
|
|
$ |
5,566.4 |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Operating (loss) income
(a)(b): |
|
|
|
|
|
|
|
Premium Fashion (c) |
$ |
28.1 |
|
|
$ |
52.6 |
|
|
$ |
72.7 |
|
|
$ |
102.3 |
|
Plus Fashion (d) |
1.6 |
|
|
5.9 |
|
|
(71.4 |
) |
|
0.6 |
|
Kids Fashion |
(16.3 |
) |
|
(1.5 |
) |
|
(42.4 |
) |
|
18.7 |
|
Value Fashion (e) |
2.2 |
|
|
(7.3 |
) |
|
(101.7 |
) |
|
(128.5 |
) |
Unallocated restructuring and other related charges |
(98.6 |
) |
|
(17.7 |
) |
|
(127.7 |
) |
|
(76.6 |
) |
Unallocated impairment of goodwill (f) |
(160.9 |
) |
|
— |
|
|
(276.0 |
) |
|
— |
|
Unallocated impairment of other intangible assets
(f) |
(109.9 |
) |
|
— |
|
|
(134.9 |
) |
|
— |
|
Unallocated acquisition and integration expenses |
— |
|
|
— |
|
|
— |
|
|
(5.4 |
) |
Total operating (loss)
income |
$ |
(353.8 |
) |
|
$ |
32.0 |
|
|
$ |
(681.4 |
) |
|
$ |
(88.9 |
) |
|
Three Months Ended |
|
Twelve Months Ended |
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Non-GAAP adjusted operating
income (loss) |
|
|
|
|
|
|
|
Premium Fashion (c) |
$ |
28.1 |
|
|
$ |
53.4 |
|
|
$ |
72.7 |
|
|
$ |
109.8 |
|
Plus Fashion (d) |
1.6 |
|
|
(0.5 |
) |
|
(55.1 |
) |
|
(5.8 |
) |
Kids Fashion |
(16.3 |
) |
|
(18.8 |
) |
|
(42.4 |
) |
|
1.4 |
|
Value Fashion (e) |
2.2 |
|
|
(9.7 |
) |
|
(84.3 |
) |
|
(113.8 |
) |
Total non-GAAP adjusted
operating income (loss) |
$ |
15.6 |
|
|
$ |
24.4 |
|
|
$ |
(109.1 |
) |
|
$ |
(8.4 |
) |
See accompanying footnotes on the following page.
ascena retail group, inc.Segment
Information (Unaudited)(millions)
Footnotes to segment tables:
(a) Current year amounts reflect the impact of adopting the new
revenue recognition accounting standard in the first quarter of
Fiscal 2019. Prior period amounts have not been restated and
continue to be reported under the accounting standards in effect
for those periods.
(b) The Company's fiscal year ended August 4, 2018 was a 53-week
year as the Company conformed to the calendar of the National
Retail Federation. The three and twelve months ended August 4, 2018
include the results of the Value Fashion,
Plus Fashion and Kids Fashion
segments for 14 and 53-weeks, respectively, while the results of
the Premium Fashion segment are included for 13
and 53-weeks, respectively. Operating income of $25.3 and $28.1
million from the additional week has been excluded from non-GAAP
adjusted operating income for the three and twelve months ended
August 4, 2018, respectively. Reference is made to Notes 1 and 2 of
the unaudited condensed consolidated financial information included
herein for more information and a reconciliation of results on a
GAAP basis to a non-GAAP adjusted basis.
(c) Operating loss for the twelve months ended August 4, 2018
includes the impact of non-cash expenses of $9.5 million associated
with the purchase accounting adjustments of ANN's
assets and liabilities to fair market value. Reference is made to
Note 2 of the unaudited condensed consolidated financial
information included herein for a reconciliation of results on a
GAAP basis to a non-GAAP adjusted basis.
(d) Operating loss includes the impact of non-cash impairment
charge of approximately $16.3 million in the third quarter of
Fiscal 2019 to write-down store-related assets at the Plus
Fashion segment. Reference is made to Note 2 of the
unaudited condensed consolidated financial information included
herein for more information and a reconciliation of results on a
GAAP basis to a non-GAAP adjusted basis.
(e) Operating loss includes the impact of non-cash impairment
charge of approximately $17.4 million in the third quarter of
Fiscal 2019 and $17.1 million in the third quarter of Fiscal 2018,
primarily to write-down store-related assets at
Dressbarn. Reference is made to Note 2 of the
unaudited condensed consolidated financial information included
herein for more information and a reconciliation of results on a
GAAP basis to a non-GAAP adjusted basis.
(f) Operating loss for the three months ended August 3, 2019
includes the impact of non-cash impairments of goodwill and other
intangible assets at the Premium Fashion,
Plus Fashion and Kids Fashion
segments, which included $160.9 million of goodwill and $109.9
million of other intangible assets. The loss for the twelve months
ended August 3, 2019 includes the non-cash impairments of goodwill
and other intangible assets previously discussed as well as
additional impairments at the Plus Fashion segment
in the third quarter of $115.1 million of goodwill and $25.0
million of other intangible assets. Reference is made to Note 2 of
the unaudited condensed consolidated financial information included
herein for a reconciliation of results on a GAAP basis to a
non-GAAP adjusted basis.
ascena retail group, inc.Notes to
Unaudited Condensed Consolidated Financial
Information(millions, except per share
data)
Note 1. Basis of Presentation
Fiscal Period
Fiscal year 2019 ended on August 3, 2019 ("Fiscal 2019") and the
three and twelve month periods reflect a 13-week and 52-week
period, respectively.
Fiscal year 2018 ended on August 4, 2018 and was a 53-week
period (“Fiscal 2018”) as the Company conformed its fiscal periods
to the National Retail Federation calendar. The Company's
Value Fashion, Plus Fashion, and
Kids Fashion segments recognized the extra week in
the fourth quarter of Fiscal 2018, whereas the Company's
Premium Fashion segment, which historically has
followed the National Retail Federation calendar, recognized their
extra week in the second quarter of Fiscal 2018 consistent with
other retail companies already on that calendar. As a result, the
three and twelve months ended August 4, 2018 include the results of
the Value Fashion, Plus Fashion
and Kids Fashion segments for 14 and 53-weeks,
respectively, while the results of the Premium
Fashion segment are included for 13 and 53-weeks,
respectively.
Discontinued Operations
On May 6, 2019, the Company completed its previously announced
sale of its maurices business. As a result of the
transaction, the Company's maurices business has
been classified as a component of discontinued operations within
the consolidated financial statements for all periods
presented.
Note 2. Reconciliation of Non-GAAP Financial
Measures
The comparability of the Company's operational results reported
in accordance with U.S. generally accepted accounting principles
("GAAP") for the periods presented herein has been affected by
certain transactions. The Company believes that the non-GAAP
financial measures presented below, when reviewed in conjunction
with GAAP financial measures, can provide more information to
assist investors in evaluating current period performance, trends
and period-over-period comparative results. Non-GAAP measures
eliminate amounts that do not reflect the fundamental performance
of the Company’s businesses. These items include costs such as (i)
impairments of goodwill and other intangible assets, (ii) costs
associated with the wind down of the Dressbarn
operations, (iii) restructuring, tangible asset impairments and
other related charges including, but not limited to, charges
incurred under the Company's cost reduction initiatives, and (iv)
the impact of adopting the Tax Reform Act of 2017.
Additionally, the GAAP results for Fiscal 2018 reflect an
additional week that was recorded by the Premium
Fashion segment during the second quarter and the
other segments during the fourth quarter.
Many investors also use non-GAAP measures as a common basis for
comparing the performance of different companies. A general
limitation of non-GAAP measures is that they are not prepared in
accordance with GAAP and may not be comparable to similarly titled
measures of other companies due to differences in methods of
calculation and excluded items. Non-GAAP measures should be
considered in addition to, not as a substitute for, the Company’s
Operating income and Net income per common share, as well as other
measures of financial performance and liquidity reported in
accordance with GAAP.
The following tables reconcile non-GAAP financial measures to
the most directly comparable GAAP financial measures and include
Net sales, Gross margin, BD&O expense, SG&A expense,
Depreciation and amortization expense, Operating (loss) income,
Income tax benefit (provision), Net loss from continuing
operations, Diluted net loss per common share from continuing
operations and earnings before interest, taxes, depreciation and
amortization, as adjusted ("Adjusted EBITDA").
ascena retail group, inc.Notes to
Unaudited Condensed Consolidated Financial Information -
(continued)(millions, except per share
data)
Note 2. Reconciliation of Non-GAAP Financial Measures
(continued)
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Net sales - reported GAAP basis |
|
$ |
1,454.2 |
|
|
$ |
1,519.5 |
|
|
$ |
5,493.4 |
|
|
$ |
5,566.4 |
|
Impact of non-cash purchase accounting adjustments (a) |
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
Additional week |
|
— |
|
|
(70.2 |
) |
|
— |
|
|
(94.8 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP Net
sales |
|
$ |
1,454.2 |
|
|
$ |
1,449.3 |
|
|
$ |
5,493.4 |
|
|
$ |
5,471.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Gross Margin - reported GAAP basis |
|
$ |
789.2 |
|
|
$ |
882.3 |
|
|
$ |
3,061.3 |
|
|
$ |
3,232.3 |
|
Impact of non-cash purchase accounting adjustments (a) |
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
Additional week |
|
— |
|
|
(40.8 |
) |
|
— |
|
|
(52.5 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin |
|
$ |
789.2 |
|
|
$ |
841.5 |
|
|
$ |
3,061.3 |
|
|
$ |
3,180.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Buying, distribution & occupancy expense - reported
GAAP basis |
|
$ |
(275.4 |
) |
|
$ |
(291.3 |
) |
|
$ |
(1,120.5 |
) |
|
$ |
(1,149.5 |
) |
Impact of non-cash purchase accounting adjustments (a) |
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
Additional week |
|
— |
|
|
2.6 |
|
|
— |
|
|
3.6 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Buying, distribution & occupancy expense |
|
$ |
(275.4 |
) |
|
$ |
(288.7 |
) |
|
$ |
(1,120.5 |
) |
|
$ |
(1,145.8 |
) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Selling, general & administrative expense - reported
GAAP basis |
|
$ |
(420.5 |
) |
|
$ |
(458.6 |
) |
|
$ |
(1,783.7 |
) |
|
$ |
(1,766.2 |
) |
Impact of non-cash purchase accounting adjustments (a) |
|
— |
|
|
— |
|
|
— |
|
|
3.2 |
|
Additional week |
|
— |
|
|
12.9 |
|
|
— |
|
|
20.8 |
|
Store-related impairment (b) |
|
— |
|
|
— |
|
|
16.3 |
|
|
17.1 |
|
Charges related to Dressbarn wind down (c) |
|
— |
|
|
— |
|
|
17.4 |
|
|
— |
|
Non-GAAP Selling,
general & administrative expense |
|
$ |
(420.5 |
) |
|
$ |
(445.7 |
) |
|
$ |
(1,750.0 |
) |
|
$ |
(1,725.1 |
) |
ascena retail group, inc.Notes to
Unaudited Condensed Consolidated Financial Information -
(continued)(millions, except per share
data)
Note 2. Reconciliation of Non-GAAP Financial Measures
(continued)
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Depreciation and amortization expense - reported GAAP
basis |
|
$ |
(77.7 |
) |
|
(82.7 |
) |
|
$ |
(299.9 |
) |
|
(323.5 |
) |
Impact of non-cash purchase accounting adjustments (a) |
|
— |
|
|
— |
|
|
— |
|
|
6.0 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Depreciation and amortization
expense |
|
$ |
(77.7 |
) |
|
$ |
(82.7 |
) |
|
$ |
(299.9 |
) |
|
$ |
(317.5 |
) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Operating (loss)
income - reported GAAP basis |
|
$ |
(353.8 |
) |
|
32.0 |
|
|
$ |
(681.4 |
) |
|
(88.9 |
) |
Impact of non-cash purchase accounting adjustments (a) |
|
— |
|
|
— |
|
|
— |
|
|
9.5 |
|
Store-related impairment (b) |
|
— |
|
|
— |
|
|
16.3 |
|
|
17.1 |
|
Charges related to Dressbarn wind down (c) |
|
— |
|
|
— |
|
|
17.4 |
|
|
— |
|
Goodwill and other intangible impairments (d) |
|
270.8 |
|
|
— |
|
|
410.9 |
|
|
— |
|
Acquisition and integration expenses (e) |
|
— |
|
|
— |
|
|
— |
|
|
5.4 |
|
Restructuring and other related charges (f) |
|
98.6 |
|
|
17.7 |
|
|
127.7 |
|
|
76.6 |
|
Additional week |
|
— |
|
|
(25.3 |
) |
|
— |
|
|
(28.1 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP Operating income (loss) |
|
$ |
15.6 |
|
|
$ |
24.4 |
|
|
$ |
(109.1 |
) |
|
$ |
(8.4 |
) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
(Provision) benefit
for income taxes from continuing operations - reported GAAP
basis |
|
(29.2 |
) |
|
19.3 |
|
|
14.5 |
|
|
62.3 |
|
Income tax impact of non-GAAP adjustments (g) |
|
(53.8 |
) |
|
2.1 |
|
|
(77.0 |
) |
|
(24.3 |
) |
Income tax impact of federal and state tax valuation allowance
(h) |
|
79.5 |
|
|
(1.5 |
) |
|
85.9 |
|
|
21.8 |
|
Income tax impact of 2017 Tax Reform Act (i) |
|
— |
|
|
(17.7 |
) |
|
7.7 |
|
|
(36.9 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP income tax (provision) benefit from continuing
operations |
|
$ |
(3.5 |
) |
|
$ |
2.2 |
|
|
$ |
31.1 |
|
|
$ |
22.9 |
|
ascena retail group, inc.Notes to
Unaudited Condensed Consolidated Financial Information -
(continued)(millions, except per share
data)
Note 2. Reconciliation of Non-GAAP Financial Measures
(continued)
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
(Loss)
income from continuing operations - reported GAAP
basis |
|
(420.2 |
) |
|
15.8 |
|
|
$ |
(782.3 |
) |
|
(143.0 |
) |
Impact of non-cash purchase accounting adjustments (a) |
|
— |
|
|
— |
|
|
— |
|
|
9.5 |
|
Store-related asset impairments (b) |
|
— |
|
|
— |
|
|
16.3 |
|
|
17.1 |
|
Charges related to Dressbarn wind down (c) |
|
— |
|
|
— |
|
|
17.4 |
|
|
— |
|
Goodwill and other intangible impairments (d) |
|
270.8 |
|
|
— |
|
|
410.9 |
|
|
— |
|
Acquisition and integration expenses (e) |
|
— |
|
|
— |
|
|
— |
|
|
5.4 |
|
Restructuring and other related charges (f) |
|
98.6 |
|
|
17.7 |
|
|
127.7 |
|
|
76.6 |
|
Additional week |
|
— |
|
|
(23.5 |
) |
|
— |
|
|
(26.3 |
) |
Loss on extinguishment of debt |
|
— |
|
|
5.0 |
|
|
— |
|
|
5.0 |
|
Income tax impact of non-GAAP adjustments (g) |
|
(53.8 |
) |
|
2.1 |
|
|
(77.0 |
) |
|
(24.3 |
) |
Income tax impact of federal and state tax valuation allowance
(h) |
|
79.5 |
|
|
(1.5 |
) |
|
85.9 |
|
|
21.8 |
|
Income tax impact of 2017 Tax Reform Act (i) |
|
— |
|
|
(17.7 |
) |
|
7.7 |
|
|
(36.9 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP net loss from continuing operations |
|
$ |
(25.1 |
) |
|
$ |
(2.1 |
) |
|
$ |
(193.4 |
) |
|
$ |
(95.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Diluted net (loss) income per common share from continuing
operations - reported GAAP basis |
|
$ |
(2.12 |
) |
|
$ |
0.08 |
|
|
$ |
(3.96 |
) |
|
$ |
(0.73 |
) |
Per share impact of non-cash purchase accounting
adjustments(a) |
|
— |
|
|
— |
|
|
— |
|
|
0.05 |
|
Per share impact of store-related impairment (b) |
|
— |
|
|
— |
|
|
0.08 |
|
|
0.08 |
|
Per share impact of charges related to Dressbarn
wind down (c) |
|
— |
|
|
— |
|
|
0.09 |
|
|
— |
|
Per share impact of goodwill and other intangible impairments
(d) |
|
1.37 |
|
|
— |
|
|
2.08 |
|
|
— |
|
Per share impact of Acquisition and integration related expenses
(e) |
|
— |
|
|
— |
|
|
— |
|
|
0.03 |
|
Per share impact of Restructuring and other related charges
(f) |
|
0.49 |
|
|
0.09 |
|
|
0.65 |
|
|
0.39 |
|
Per share impact of additional week |
|
— |
|
|
(0.12 |
) |
|
— |
|
|
(0.13 |
) |
Per share impact of Loss from extinguishment of debt |
|
— |
|
|
0.03 |
|
|
— |
|
|
0.03 |
|
Per share income tax impact of non-GAAP adjustments (g) |
|
(0.27 |
) |
|
0.01 |
|
|
(0.39 |
) |
|
(0.12 |
) |
Per share income tax impact of federal and state tax valuation
allowance (h) |
|
0.40 |
|
|
(0.01 |
) |
|
0.43 |
|
|
0.11 |
|
Per share income tax impact of 2017 Tax Reform Act (i) |
|
— |
|
|
(0.09 |
) |
|
0.04 |
|
|
(0.19 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP diluted net
loss per common share from continuing operations (j) |
|
$ |
(0.13 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.98 |
) |
|
$ |
(0.48 |
) |
ascena retail group, inc.Notes to
Unaudited Condensed Consolidated Financial Information -
(continued)(millions, except per share
data)
Note 2. Reconciliation of Non-GAAP Financial Measures
(continued)
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Adjusted EBITDA |
|
$ |
93.3 |
|
|
$ |
107.1 |
|
|
$ |
190.8 |
|
|
$ |
309.1 |
|
Impact of non-cash purchase accounting adjustments (a) |
|
— |
|
|
— |
|
|
— |
|
|
(3.5 |
) |
Additional week |
|
— |
|
|
25.3 |
|
|
— |
|
|
28.1 |
|
Store-related asset impairments (b) |
|
— |
|
|
— |
|
|
(16.3 |
) |
|
(17.1 |
) |
Charges related to Dressbarn wind down (c) |
|
— |
|
|
— |
|
|
(17.4 |
) |
|
— |
|
Goodwill and other intangible impairments (d) |
|
(270.8 |
) |
|
— |
|
|
(410.9 |
) |
|
— |
|
Acquisition and integration expenses (e) |
|
— |
|
|
— |
|
|
— |
|
|
(5.4 |
) |
Restructuring and other related charges (f) |
|
(98.6 |
) |
|
(17.7 |
) |
|
(127.7 |
) |
|
(76.6 |
) |
Depreciation and amortization expense |
|
(77.7 |
) |
|
(82.7 |
) |
|
(299.9 |
) |
|
(323.5 |
) |
Operating
loss |
|
(353.8 |
) |
|
32.0 |
|
|
(681.4 |
) |
|
(88.9 |
) |
Interest expense |
|
(26.9 |
) |
|
(30.8 |
) |
|
(107.0 |
) |
|
(113.0 |
) |
Interest income and other income, net |
|
1.5 |
|
|
0.3 |
|
|
3.4 |
|
|
1.6 |
|
Loss on extinguishment of debt |
|
— |
|
|
(5.0 |
) |
|
— |
|
|
(5.0 |
) |
Loss from
continuing operations before benefit for income taxes |
|
(379.2 |
) |
|
(3.5 |
) |
|
(785.0 |
) |
|
(205.3 |
) |
(Provision) benefit for income taxes from continuing
operations |
|
(29.2 |
) |
|
19.3 |
|
|
14.5 |
|
|
62.3 |
|
Income from equity method investment, net of taxes |
|
(11.8 |
) |
|
— |
|
|
(11.8 |
) |
|
— |
|
Loss from
continuing operations |
|
(420.2 |
) |
|
15.8 |
|
|
(782.3 |
) |
|
(143.0 |
) |
Income from discontinued operations, net of taxes |
|
17.7 |
|
|
17.4 |
|
|
76.4 |
|
|
103.3 |
|
Gain on disposal of discontinued operations, net of taxes |
|
44.5 |
|
|
$ |
— |
|
|
44.5 |
|
|
— |
|
Net
loss |
|
$ |
(358.0 |
) |
|
$ |
33.2 |
|
|
$ |
(661.4 |
) |
|
$ |
(39.7 |
) |
(a) Includes the impact of non-cash expenses associated with the
purchase accounting adjustments of ANN's assets and liabilities to
fair market value, calculated in accordance with Accounting
Standards Codification 805 - Business Combinations, such as
adjustments to depreciation and amortization related to the
write-up of ANN's customer relationships and property and equipment
and other purchase accounting adjustments, which are primarily
lease-related. Such costs are unique to each transaction and the
nature and amount of such costs vary significantly based on the
size and timing of the acquisitions and the maturities of the
businesses being acquired. Previous to the third quarter of Fiscal
2018, we had excluded these costs because we believed that the
costs were material to investors and that these non-cash
adjustments are inconsistent in amount and frequency and are
significantly impacted by the timing and/or size of acquisition.
During the third quarter of Fiscal 2018, we concluded that such
costs were no longer material and, accordingly we are no longer
adjusting for these costs beginning with the third quarter of
Fiscal 2018. We will continue to present all prior year quarters as
previously adjusted as a supplement to the GAAP information.
Amounts recorded in the periods presented are as follows:
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Net sales |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.2 |
|
Other operating expenses |
|
— |
|
|
— |
|
|
— |
|
|
3.3 |
|
Depreciation and
amortization |
|
— |
|
|
— |
|
|
— |
|
|
6.0 |
|
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
9.5 |
|
(b) Operating loss includes the impact of non-cash impairment
charges to write-down store-related assets at the Plus
Fashion segment in the third quarter of Fiscal 2019 and at
the Value Fashion segment in the third quarter of
Fiscal 2018.
ascena retail group, inc.Notes to
Unaudited Condensed Consolidated Financial Information -
(continued)(millions, except per share
data)
Note 2. Reconciliation of Non-GAAP Financial Measures
(continued)
(c) Operating loss includes costs associated with the wind down
of Dressbarn's operations and primarily include a
write-down of store-related assets to fair value and professional
fees incurred during the third quarter of Fiscal 2019 in connection
with the wind down. Wind down charges incurred during the fourth
quarter of Fiscal 2019 have been classified within Restructuring
and other related charges.
(d) Operating loss includes the impact of non-cash impairment
charges reflecting a write-down of goodwill and other intangible
assets to fair value based on the results of an interim test during
the third quarter of Fiscal 2019 and a year-end impairment test in
the fourth quarter of Fiscal 2019.
(e) Primarily reflects professional fees and other costs
related to the acquisition of ANN INC.
(f) Reflects (i) severance and professional fees incurred
under the Company's Change for Growth program and other cost
reduction initiatives in both years, (ii) severance costs and
professional fees associated with the wind down of
Dressbarn's operations in the fourth quarter of
Fiscal 2019, (iii) a non-cash write-down of
Dressbarn's corporate headquarters building to
fair market value in the fourth quarter of Fiscal 2019, (iv) the
write-down of a corporate-owned office building in Duluth, MN to
fair market value as a result of the sale of
maurices in the fourth quarter of Fiscal 2019, and
(v) write-downs of fixed assets resulting from program activities
related to the Company's fleet optimization program in Fiscal 2018.
Amounts recorded in each period presented are as follows:
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 3,2019 |
|
August 4,2018 |
|
August 3,2019 |
|
August 4,2018 |
Professional fees and other related charges |
|
$ |
10.6 |
|
|
$ |
16.0 |
|
|
$ |
39.3 |
|
|
$ |
59.2 |
|
Severance and retention |
|
42.6 |
|
|
(0.7 |
) |
|
43.0 |
|
|
5.7 |
|
Impairment of assets |
|
45.4 |
|
|
2.4 |
|
|
45.4 |
|
|
11.7 |
|
|
|
$ |
98.6 |
|
|
$ |
17.7 |
|
|
$ |
127.7 |
|
|
$ |
76.6 |
|
(g) Represents the income tax impact applicable to each non-GAAP
adjustment described above.
(h) Due to the limitations placed on the use of federal and
state income tax net operating losses, the Company established a
partial valuation allowance for its federal and state net operating
losses during Fiscal 2019 and 2018. Because this expense is
significant, and non-cash in nature, the Company has excluded the
expense attributable to these valuation allowances from its
non-GAAP results.
(i) Reflects adjustments made by the Company in adopting
the 2017 Tax Reform Act (the "2017 Act") consistent with the relief
provided by the SEC in Staff Accounting Bulletin No. 118. Fiscal
2018 reflects the Company's initial assessment of adopting the 2017
Act. The Company completed its assessment during the second quarter
of Fiscal 2019 and recorded $2.5 million of additional federal and
state transition tax and a $5.2 million valuation allowance
resulting from the impact of GILTI on its U.S. federal net
operating loss carryforward.
(j) Reflects the impact on EPS of using 198.0 and 197.5
million weighted average common shares for both GAAP net loss per
diluted common share and adjusted net loss per diluted common share
for the three and twelve months ended August 3, 2019, respectively.
Also reflects the impact on EPS of using 196.3 and 196.0 million
weighted average common shares for both GAAP net loss per diluted
common share and adjusted net loss per diluted common share for the
three and twelve months ended August 4, 2018, respectively. The
number of weighted average basic and diluted common shares for all
periods presented are equal as the impact of potentially dilutive
stock options and restricted stock units was anti-dilutive under
the treasury stock method due to the net loss reported during the
period.
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