Ascena launches inner reorganization plan

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This article was originally published on Financial Times Debtwire. 

Ascena is projecting USD 5bn in sales and a 12% operating income this year with consolidation of brands and a restructure layout, according to the company president and CEO David Jaffe at ICR Xchange conference. The company plans to liquidate its Fashion Bug division and finally shut it down, and the liquidation is expected to be completed by the end of January. This came after the elimination of Figi’s after the lower than expected holiday sales.

A merger of Lane Bryant Outlet into Lane Bryant is also on the to-do list, and by internalizing the two shared services, the Suffern, New York headquartered clothing retail company would make its structure “a lot simpler”, with five brands and services brands supporting the brands, added Jaffe.  This is part of the fashion retailer’s mission to focus more on its back end besides putting managing units in a choice city potentially being Duluth, Columbus or Bensalem.

The company projects its brand Brothers to generate significant growth, with 30 stores opening up in the spring on top of 30 existing stores. The fashion retailer is also considering repositioning another brand Lane Bryant into strips from mall stores, which has had a revolving door of presidents and spread focus over the past few years.

“This is a process. I’m sure we’re going to stub our toe and make mistakes, but we’re going to test new things and we’re going to continue to listen to the customer in response to what it is that she’s looking for,” said Jaffe at the conference.

On top of the restricting plan, the company would like to advance its Maurices brand into smaller markets from the existing markets of population 150,000 and below, with a goal of building 50% more stores throughout the country and Canada.

Building on retail e-commerce as an already successful revenue driver, the company plans to take e-commerce in house to the back end also from the previous outsourcing choices to increase distribution efficiency.

The company has USD 150m in pocket, with USD 80m from the acquisition of Charming Shoppes, and existing USD 70m, but it plans to bring it down to USD 100m to support operations.

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