Economy Watch: Closings Loom for Fashion Retailer
- Jun 13, 2017
The retail contraction of 2017 continued late last week when the Ascena Retail Group held its latest earnings call. The company operates such stores as Ann Taylor, The Loft, Maurices, Dressbarn, Catherines, Justice, and Total Kids Fashion, all of which tend to be in-line stores in malls. All together, Ascena operates about 4,800 stores, and the news offered on the call wasn’t good.
“Over the next two years, we expect to close or achieve substantial rent reductions in more than 650 stores, which represent almost 25 percent of the total store population with lease-term maturity between 2017 and July 2019,” said CEO David Jaffe during the call. “We’ve identified more than 250 locations that will be permanently closed through 2019.”
He added that an additional 400 or so more stores will be closed during the same period if Ascena can’t obtain lease relief through negotiations with landlords.
The company’s fundamentals — and it’s a story being repeated in a lot of retail-oriented places — tell why so many stores will be closed. Ascena recorded a net loss of $1 billion last quarter, compared to an income of $15 million in the same quarter last year, as well as a $1.6 billion drop in sales for the quarter, down from $1.7 billion in the same quarter last year. Same-store sales overall were down 8 percent for the year, with some brands faring even worse, such as a 12 percent drop for Maurices and an 11 percent drop for Catherines.