ascena retail group, inc.
(Nasdaq - ASNA)
(“ascena” or the “Company”) today reported financial results for
its fiscal first quarter ended November 2, 2019.
First Quarter Highlights:
- Comparable sales were flat; excluding
Dressbarn, comparable sales were (2)%
- Operating income was $40 million, which primarily reflects the
benefit of cost reductions, offset in part by lower gross margin;
adjusted operating income, excluding the restructuring costs as
detailed in Note 2, was $45 million;
- Dressbarn wind down on track and store
closures are expected to be completed in December 2019;
- Improved inventory levels, down 5% versus the prior year;
and
- Cash and revolver availability of $680 million; compliant with
all covenants.
Gary Muto, Chief Executive Officer of ascena commented, "We were
pleased to have exceeded our adjusted operating income expectations
for the first quarter through better than expected improvement in
operating expenses. We continue to make advances on right-sizing
our cost structure, while focusing on driving sustainable growth
and improved operating margin for each of our segments. In
addition, we once again ended the quarter in a strong cash and
liquidity position with no borrowings under our credit facility as
we remain disciplined in managing working capital and rationalizing
our capital expenditures."
Mr. Muto continued, "While we are encouraged by the progress we
are making, we know there is more work to be done. We are
moving our brands in the right direction by capitalizing on their
distinct market leadership positions while maintaining our focus on
optimizing our capital structure. The steps we are taking now set
us up to provide consistent profitable performance and enhance
shareholder value over the longer term.”
Fiscal First Quarter Results - Consolidated
OverviewCurrent and prior year results include
items that the Company does not believe reflect the fundamental
performance of its business. More information on such items
is provided in the Notes to the unaudited condensed consolidated
financial information, which is included herein on pages 9 through
11. In addition, the following commentary reflects results
from the Company's continuing operations that exclude its
maurices brand, which was sold in Fiscal 2019.
Net sales and comparable salesNet sales for the
first quarter of Fiscal 2020 were $1,297 million compared to $1,339
million in the year-ago period. Net sales primarily reflect
flat comparable sales for the quarter and a decrease in
non-comparable sales which include the impact of the store
closures.
The Company's comparable and net sales data are summarized
below:
|
|
|
|
Net Sales (millions) |
|
|
Comparable |
|
Three Months Ended |
|
|
Sales |
|
November 2, 2019 |
|
November 3, 2018 |
|
Ann Taylor |
(1)% |
|
$ |
181.9 |
|
|
$ |
185.7 |
|
|
LOFT |
(2)% |
|
403.1 |
|
|
410.3 |
|
|
Premium
Fashion |
(2)% |
|
585.0 |
|
|
596.0 |
|
|
|
|
|
|
|
|
|
Lane Bryant |
2% |
|
220.7 |
|
|
220.0 |
|
|
Catherines |
(5)% |
|
59.1 |
|
|
65.4 |
|
|
Plus
Fashion |
1% |
|
279.8 |
|
|
285.4 |
|
|
|
|
|
|
|
|
|
Justice |
(6)% |
|
254.8 |
|
|
266.0 |
|
|
Kids
Fashion |
(6)% |
|
254.8 |
|
|
266.0 |
|
|
|
|
|
|
|
|
|
Dressbarn |
10% |
|
177.5 |
|
|
191.1 |
|
|
Value
Fashion |
10% |
|
177.5 |
|
|
191.1 |
|
|
|
|
|
|
|
|
|
Total
Company |
—% |
|
$ |
1,297.1 |
|
|
$ |
1,338.5 |
|
Excluding Dressbarn, the Company's comparable
sales for the first quarter of Fiscal 2020 was (2)%.
Gross marginGross margin decreased to $773
million, or 59.6% of sales, for the first quarter of Fiscal 2020,
compared to $801 million, or 59.9% of sales in the year-ago period.
The decline in gross margin rate from the first quarter last year
was primarily due to higher promotional activity at our
Kids Fashion and Premium Fashion
segments. Those declines were partially offset by increased
margins at our Plus Fashion segment, reflecting
improved product acceptance and a higher mix of full price selling,
and at our Value Fashion segment.
Buying, distribution, and occupancy
expensesBuying, distribution, and occupancy (“BD&O”)
expenses for the first quarter of Fiscal 2020 decreased 9% to $257
million, which represented 19.8% of sales, compared to $282
million, or 21.0% of sales in the year-ago period. In terms
of dollars, the reduction in expenses was driven by lower occupancy
expenses resulting primarily from our continued cost reduction
efforts and lower buying expenses at Dressbarn as
a result of the planned wind down.
Selling, general, and administrative
expensesSelling, general, and administrative (“SG&A”)
expenses for the first quarter of Fiscal 2020 decreased 9% to $397
million, or 30.6% of sales, compared to $436 million, or 32.6% of
sales in the year-ago period. The decrease in SG&A
expenses was primarily due to our cost reduction initiatives,
mainly reflecting lower store-related expenses, lower headcount as
well as non-merchandise procurement savings.
Operating resultsOperating income for the first
quarter of Fiscal 2020 was $40 million compared to $1 million in
the year-ago period, and primarily reflects the expense reductions,
offset in part by the gross margin dollar declines. Excluding the
restructuring costs as detailed in Note 2, operating income for the
quarter was $45 million.
Provision for income taxes from
continuing operationsFor the first quarter of Fiscal 2020,
the Company recorded tax expense of $3 million on pre-tax income of
$15 million. The effective tax rate of 17.0% was lower than the
statutory tax rate primarily due to a valuation allowance on the
Company’s net Federal and state deferred tax assets.
Net income (loss) from continuing
operations and Income (loss) per diluted share
from continuing operationsThe Company reported Net income
from continuing operations of $32 million, or $0.16 per diluted
share in the first quarter of Fiscal 2020, compared to a Net loss
from continuing operations of $24 million, or $0.12 per diluted
share, in the year-ago period.
Fiscal First Quarter Balance Sheet
Highlights
Cash and cash equivalentsThe Company ended the
first quarter of Fiscal 2020 with Cash and cash equivalents of $262
million, down from $328.0 million at the end of the fourth quarter
of Fiscal 2019 as a result of seasonal inventory purchases in
advance of the peak holiday season.
InventoriesThe Company ended the first quarter
of Fiscal 2020 with inventory of $673 million, down 5% from the
year-ago period.
Capital expendituresCapital expenditures for
the first quarter of Fiscal 2020 totaled $29 million, compared to
$39 million in the year-ago period.
DebtThe Company ended the first quarter of
Fiscal 2020 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 first quarter of Fiscal 2020 and the Company had $417
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. Subsequent to the first quarter of Fiscal 2020, the
Company repurchased approximately $80 million aggregate principal
amount of its Term Loan debt in open market transactions for a
total purchase price of approximately $50 million.
Fiscal Year 2020 Second Quarter and Full Year Year
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 second quarter of Fiscal
2020 for the consolidated continuing operations of the
Premium Fashion, Plus Fashion,
and Kids Fashion segments as follows:
- Net sales of $1.200 to $1.225 billion;
- Comparable sales of negative low single digits;
- Gross margin rate of 51.2% to 51.7%;
- Depreciation and amortization of approximately $64 million;
and
- Adjusted operating loss of $40 million to $60 million.
In addition, for the full year, we continue to expect that total
capital spending will 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 first quarter is as follows:
|
Quarter Ended November 2, 2019 |
|
Store Locations Beginning of Q1 |
Store Locations Opened |
Store Locations Closed |
Store Locations End of Q1 |
Justice |
826 |
2 |
— |
828 |
Lane
Bryant |
721 |
— |
(6) |
715 |
LOFT |
669 |
1 |
— |
670 |
Dressbarn |
616 |
— |
(72) |
544 |
Catherines |
320 |
— |
(7) |
313 |
Ann
Taylor |
293 |
— |
— |
293 |
Total |
3,445 |
3 |
(85) |
3,363 |
Conference Call Information
The Company will conduct a conference call today, December 9,
2019, at 4:30 PM Eastern Time to review its first quarter Fiscal
2020 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 13697197.
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 December 23, 2019 by dialing
(844) 512-2921, the conference ID is 13697197, and until January 9,
2020 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)
costs associated with the wind down of its
Dressbarn operations, (ii) restructuring, tangible
asset impairments and other related charges including, but not
limited to, charges incurred under the Company's cost reduction
initiatives, and (iii) impairments of goodwill and other intangible
assets. 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 second 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 |
|
|
November 2, 2019 |
|
% of Net Sales |
|
November 3, 2018 |
|
% of Net Sales |
|
Net sales |
$ |
1,297.1 |
|
|
100.0 |
% |
|
$ |
1,338.5 |
|
|
100.0 |
% |
|
Cost of goods sold |
(523.8 |
) |
|
(40.4 |
)% |
|
(537.4 |
) |
|
(40.1 |
)% |
|
Gross margin |
773.3 |
|
|
59.6 |
% |
|
801.1 |
|
|
59.9 |
% |
|
Other costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Buying, distribution and occupancy expenses |
(256.8 |
) |
|
(19.8 |
)% |
|
(281.7 |
) |
|
(21.0 |
)% |
|
Selling, general and administrative expenses |
(397.3 |
) |
|
(30.6 |
)% |
|
(435.7 |
) |
|
(32.6 |
)% |
|
Restructuring and other related charges |
(4.6 |
) |
|
(0.4 |
)% |
|
(7.9 |
) |
|
(0.6 |
)% |
|
Depreciation and amortization expense |
(74.4 |
) |
|
(5.7 |
)% |
|
(74.6 |
) |
|
(5.6 |
)% |
|
Operating
income |
40.2 |
|
|
3.1 |
% |
|
1.2 |
|
|
0.1 |
% |
|
Interest expense |
(26.4 |
) |
|
(2.0 |
)% |
|
(26.0 |
) |
|
(1.9 |
)% |
|
Interest income and other
income, net |
1.5 |
|
|
0.1 |
% |
|
0.6 |
|
|
— |
% |
|
Income (loss) from
continuing operations before (provision) benefit for income taxes
and income from equity method investment |
15.3 |
|
|
1.2 |
% |
|
(24.2 |
) |
|
(1.8 |
)% |
|
(Provision) benefit for income
taxes from continuing operations |
(2.6 |
) |
|
(0.2 |
)% |
|
0.4 |
|
|
— |
% |
|
Income from equity method
investment |
19.0 |
|
|
1.5 |
% |
|
— |
|
|
— |
% |
|
Income (loss) from
continuing operations |
31.7 |
|
|
2.4 |
% |
|
(23.8 |
) |
|
(1.8 |
)% |
|
Income from discontinued
operations, net of tax |
— |
|
|
— |
% |
|
29.7 |
|
|
2.2 |
% |
|
Net income |
$ |
31.7 |
|
|
2.4 |
% |
|
$ |
5.9 |
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common
share - basic: |
|
|
|
|
|
|
|
|
Continuing operations |
$ |
0.16 |
|
|
|
|
$ |
(0.12 |
) |
|
|
|
Discontinued operations |
— |
|
|
|
|
0.15 |
|
|
|
|
Total net income per basic
common share |
$ |
0.16 |
|
|
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common
share - diluted: |
|
|
|
|
|
|
|
|
Continuing operations |
$ |
0.16 |
|
|
|
|
$ |
(0.12 |
) |
|
|
|
Discontinued operations |
— |
|
|
|
|
0.15 |
|
|
|
|
Total net income per diluted
common share |
$ |
0.16 |
|
|
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
198.8 |
|
|
|
|
196.7 |
|
|
|
|
Diluted |
198.8 |
|
|
|
|
201.2 |
|
|
|
|
See accompanying notes.
ascena retail group, inc.Condensed
Consolidated Balance Sheets
(Unaudited)(millions)
|
|
|
|
November 2, 2019 |
|
August 3, 2019 |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
262.1 |
|
|
$ |
328.0 |
|
Inventories |
672.6 |
|
|
547.7 |
|
Prepaid expenses and other current assets |
238.2 |
|
|
279.3 |
|
Total current assets |
1,172.9 |
|
|
1,155.0 |
|
Property and equipment,
net |
795.3 |
|
|
847.0 |
|
Operating Lease right-of-use
assets |
814.6 |
|
|
— |
|
Goodwill |
313.5 |
|
|
313.5 |
|
Other intangible assets,
net |
266.8 |
|
|
276.6 |
|
Equity method investment |
61.1 |
|
|
42.1 |
|
Other assets |
66.8 |
|
|
65.6 |
|
Total
assets |
$ |
3,491.0 |
|
|
$ |
2,699.8 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
347.2 |
|
|
$ |
336.0 |
|
Accrued expenses and other current liabilities |
349.2 |
|
|
333.9 |
|
Deferred income |
119.6 |
|
|
128.3 |
|
Current portion of lease obligations |
173.2 |
|
|
— |
|
Total current liabilities |
989.2 |
|
|
798.2 |
|
Long-term debt, less current
portion |
1,341.2 |
|
|
1,338.6 |
|
Lease-related liabilities |
— |
|
|
234.2 |
|
Deferred income taxes |
0.5 |
|
|
0.6 |
|
Long-term lease
obligations |
826.1 |
|
|
— |
|
Other non-current
liabilities |
161.0 |
|
|
177.2 |
|
Total liabilities |
3,318.0 |
|
|
2,548.8 |
|
Equity |
173.0 |
|
|
151.0 |
|
Total liabilities and
equity |
$ |
3,491.0 |
|
|
$ |
2,699.8 |
|
|
|
|
|
|
|
|
|
See accompanying notes.
ascena retail group, inc.Segment
Information (Unaudited)(millions)
|
Three Months Ended |
|
November 2, 2019 |
|
November 3, 2018 |
Net sales: |
|
|
|
Premium Fashion |
$ |
585.0 |
|
|
$ |
596.0 |
|
Plus Fashion |
279.8 |
|
|
285.4 |
|
Kids Fashion |
254.8 |
|
|
266.0 |
|
Value Fashion |
177.5 |
|
|
191.1 |
|
Total net sales |
$ |
1,297.1 |
|
|
$ |
1,338.5 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
November 2, 2019 |
|
November 3, 2018 |
Operating income
(loss)(a): |
|
|
|
Premium Fashion |
$ |
38.0 |
|
|
$ |
46.1 |
|
Plus Fashion |
(0.5 |
) |
|
(18.9 |
) |
Kids Fashion |
(0.9 |
) |
|
4.5 |
|
Value Fashion |
8.2 |
|
|
(22.6 |
) |
Unallocated restructuring and other related charges |
(4.6 |
) |
|
(7.9 |
) |
Total operating income |
$ |
40.2 |
|
|
$ |
1.2 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
November 2, 2019 |
|
November 3, 2018 |
Non-GAAP adjusted operating
income (loss) (a): |
|
|
|
Premium Fashion |
$ |
38.0 |
|
|
$ |
46.1 |
|
Plus Fashion |
(0.5 |
) |
|
(18.9 |
) |
Kids Fashion |
(0.9 |
) |
|
4.5 |
|
Value Fashion |
8.2 |
|
|
(22.6 |
) |
Total non-GAAP adjusted
operating income |
$ |
44.8 |
|
|
$ |
9.1 |
|
|
|
|
|
|
|
|
|
(a) Current year amounts reflect the impact of adopting the
lease accounting standard in the first quarter of Fiscal
2020. Prior period amounts have not been restated and
continue to be reported under the accounting standards in effect
for those periods.
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 2020 will end on August 1, 2020 and will be a
52-week period ("Fiscal 2020"). Fiscal year 2019 ended on
August 3, 2019 and was a 52-week period (“Fiscal 2019”). The three
months ended November 2, 2019 and the three months ended November
3, 2018 are both 13-week periods.
Discontinued Operations
In the fourth quarter of Fiscal 2019, the Company completed the
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 the
three months ended November 3, 2018.
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. The non-GAAP
measures presented in this press release eliminate amounts that do
not reflect the fundamental performance of the Company’s
businesses. These items include costs such as (i) restructuring,
tangible asset impairments and other related charges including, but
not limited to, charges incurred under the Company's cost reduction
initiatives, (ii) costs associated with the wind down of the
Dressbarn operations, and (iii) impairments of
goodwill and other intangible assets.
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
Operating income, Income tax benefit (provision), Net income (loss)
from continuing operations, Diluted net income (loss) per common
share from continuing operations and earnings before interest,
taxes, depreciation and amortization, as adjusted ("Adjusted
EBITDA").
|
|
Three Months Ended |
|
|
November 2, 2019 |
|
November 3, 2018 |
Operating
income - reported GAAP basis |
$ |
40.2 |
|
|
$ |
1.2 |
|
|
Restructuring and other
related charges (a) |
4.6 |
|
|
7.9 |
|
|
|
|
|
|
Non-GAAP Operating income |
$ |
44.8 |
|
|
$ |
9.1 |
|
|
|
|
|
|
|
|
|
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 |
|
|
November 2, 2019 |
|
November 3, 2018 |
(Provision) benefit for income taxes from continuing
operations - reported GAAP basis |
$ |
(2.6 |
) |
|
$ |
0.4 |
|
|
Income tax impact of non-GAAP
adjustments (b) |
(0.9 |
) |
|
(1.1 |
) |
|
|
|
|
|
Non-GAAP income tax provision from continuing
operations |
$ |
(3.5 |
) |
|
$ |
(0.7 |
) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
November 2, 2019 |
|
November 3, 2018 |
Income
(loss) from continuing operations - reported GAAP
basis |
$ |
31.7 |
|
|
$ |
(23.8 |
) |
|
Restructuring and other
related charges (a) |
4.6 |
|
|
7.9 |
|
|
Income tax impact of non-GAAP
adjustments (b) |
(0.9 |
) |
|
(1.1 |
) |
|
|
|
|
|
Non-GAAP net income (loss) from continuing
operations |
$ |
35.4 |
|
|
$ |
(17.0 |
) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
November 2, 2019 |
|
November 3, 2018 |
Diluted net income (loss) per common share from continuing
operations - reported GAAP basis |
$ |
0.16 |
|
|
$ |
(0.12 |
) |
|
Per share impact of
Restructuring and other related charges (a) |
0.02 |
|
|
0.04 |
|
|
Per share income tax impact of
non-GAAP adjustments (b) |
— |
|
|
(0.01 |
) |
|
|
|
|
|
Non-GAAP
diluted net income (loss) per common share from continuing
operations (c) |
$ |
0.18 |
|
|
$ |
(0.09 |
) |
|
|
|
|
|
|
|
|
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 |
|
|
November 2, 2019 |
|
November 3, 2018 |
Adjusted EBITDA |
$ |
119.2 |
|
|
$ |
83.7 |
|
|
Restructuring and other
related charges (a) |
(4.6 |
) |
|
(7.9 |
) |
|
Depreciation and amortization
expense |
(74.4 |
) |
|
(74.6 |
) |
Operating
income |
40.2 |
|
|
1.2 |
|
|
Interest expense |
(26.4 |
) |
|
(26.0 |
) |
|
Interest income and other
income, net |
1.5 |
|
|
0.6 |
|
Income
(loss) from continuing operations before (provision) benefit for
income taxes |
15.3 |
|
|
(24.2 |
) |
|
(Provision) benefit for income
taxes from continuing operations |
(2.6 |
) |
|
0.4 |
|
|
Income from equity method
investment, net of taxes |
19.0 |
|
|
— |
|
Income
(loss) from continuing operations |
31.7 |
|
|
(23.8 |
) |
|
Income from discontinued
operations, net of taxes |
— |
|
|
29.7 |
|
Net
income |
$ |
31.7 |
|
|
$ |
5.9 |
|
|
|
|
|
|
|
|
|
(a) Fiscal 2020 reflects costs associated with the wind
down of Dressbarn, as well as the reorganization
of the Company’s sourcing operations. Charges include (i)
severance primarily related to the sourcing reorganization, (ii)
$1.1 million of professional fees offset by approximately $5.0
million received from the sale of intellectual property rights
associated with the Dressbarn ecommerce
operations, and (iii) $4.4 million of costs related to the exit of
Dressbarn’s retail store leases. Fiscal 2019
primarily reflects severance and professional fees incurred under
the Company's Change for Growth program. Amounts recorded in
each period presented are as follows:
|
Three Months Ended |
|
November 2, 2019 |
|
November 3, 2018 |
Professional fees and other related charges |
$ |
(3.9 |
) |
|
$ |
8.4 |
|
Severance and retention |
4.1 |
|
|
(0.5 |
) |
Lease termination and store
closure costs |
4.4 |
|
|
— |
|
|
$ |
4.6 |
|
|
$ |
7.9 |
|
|
|
|
|
|
|
|
|
(b) Represents the income tax impact applicable to the
non-GAAP adjustments described above using the Company's effective
rate. For Fiscal 2020, certain of the amounts are not subject
to a non-GAAP tax impact due to the Company's valuation allowance
position.
(c) Reflects the impact on EPS of using 198.8 and 196.7
million weighted average common shares for both GAAP net income per
diluted common share from continuing operations and adjusted net
income per diluted common share from continuing operations for the
three months ended November 2, 2019 and November 3, 2018,
respectively. The number of weighted average basic and
diluted common shares are equal as the impact of potentially
dilutive stock options and restricted stock units was de minimis in
the three months ended November 2, 2019 and anti-dilutive for the
three months ended November 3, 2018 under the treasury stock
method.
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