Ascena Retail Group, operator of the Ann Taylor, Loft and Lane Bryant chains, announced a plan Tuesday to improve time-to-market, reduce working capital and deliver as much as $150 million in cost savings by fiscal 2019.
Dubbed the “Change for Growth” program, Ascena has restructured its business into four operating segments focused on premium, plus, value and kids’ fashion and a number of executives are leaving the company to avoid organizational overlap. The company’s stock (ASNA) had surged 6.24% by midday Wednesday.
“After more than six months of intense development work, today we begin our comprehensive Change for Growth program to ensure that the company is effectively positioned to compete in a rapidly and profoundly changing retail and consumer environment,” stated David Jaffe, president and chief executive of Ascena. “We are ahead of plan with the synergy and cost savings work streams that will deliver $235 million of cost savings associated with our integration of Ann Inc., and the time is right for us to explore additional opportunities to fully exploit the advantages we’ve developed with our comprehensive shared services platform.”
As part of the plan, Justice President and CEO Brian Lynch will become Ascena’s chief operating officer and Lece Lohr, most recently head of merchandising at Justice, will lead the company’s newly formed kids’ segment.
Gary Muto, president and CEO of Ann Taylor, Loft and Lou & Grey, will continue to lead these brands, which now fall under the premium umbrella, while Linda Heasley, most recently president and CEO of Lane Bryant, has been appointed president and CEO of the company’s plus fashion segment, which also includes Catherines. In addition, Maurices is now part of the value fashion segment and President and CEO George Goldfarb will continue to lead it, along with Dressbarn.
The aforementioned departures are expected to result in a pre-tax charge of about $10 million to $12 million in the first quarter, the majority of which Ascena believes will be recovered throughout fiscal 2017.
In addition, a new Ascena Brand Services (ABS) team will assume responsibility for the company’s existing centralized Shared Services Group functions, including supply chain, logistics, sourcing, and IT. Supplementary brand support functions will also be developed by the team through the Change for Growth program.
Ascena currently operates 4,900 stores throughout the U.S., Canada and Puerto Rico. The company’s comparable store sales were down an estimated 6 percent in the most recent quarter.