ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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30-0641353
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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933 MacArthur Boulevard, Mahwah, New Jersey
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07430
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(Address of principal executive offices)
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(Zip Code)
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PART I. FINANCIAL INFORMATION (Unaudited)
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Page
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Item 1.
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Condensed Financial Statements:
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Condensed Consolidated Balance Sheets
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Condensed Consolidated Statements of Operations
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Condensed Consolidated Statements of Comprehensive Income
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Condensed Consolidated Statements of Cash Flows
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Condensed Consolidated Statements of Equity
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Notes to Condensed Consolidated Financial Statements
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
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Controls and Procedures
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PART II. OTHER INFORMATION
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Item 1.
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Legal Proceedings
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Item 1A.
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Risk Factors
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 6.
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Exhibits
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Signatures
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Three Months Ended
|
||||||
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November 3,
2018 |
|
October 28,
2017 |
||||
|
(millions, except per share data)
(unaudited)
|
||||||
Net sales
|
$
|
1,591.8
|
|
|
$
|
1,589.7
|
|
Cost of goods sold
|
(646.2
|
)
|
|
(624.6
|
)
|
||
Gross margin
|
945.6
|
|
|
965.1
|
|
||
|
|
|
|
||||
Other operating expenses:
|
|
|
|
||||
Buying, distribution and occupancy expenses
|
(314.7
|
)
|
|
(318.1
|
)
|
||
Selling, general and administrative expenses
|
(502.1
|
)
|
|
(492.8
|
)
|
||
Acquisition and integration expenses
|
—
|
|
|
(2.1
|
)
|
||
Restructuring and other related charges
|
(7.9
|
)
|
|
(22.2
|
)
|
||
Depreciation and amortization expense
|
(82.0
|
)
|
|
(90.0
|
)
|
||
Total other operating expenses
|
(906.7
|
)
|
|
(925.2
|
)
|
||
Operating income
|
38.9
|
|
|
39.9
|
|
||
|
|
|
|
||||
Interest expense
|
(26.0
|
)
|
|
(26.6
|
)
|
||
Interest income and other income, net
|
0.8
|
|
|
0.2
|
|
||
Income before provision for income taxes
|
13.7
|
|
|
13.5
|
|
||
Provision for income taxes
|
(7.8
|
)
|
|
(6.9
|
)
|
||
Net income
|
$
|
5.9
|
|
|
$
|
6.6
|
|
|
|
|
|
||||
Net income per common share:
|
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|
||||
Basic
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$
|
0.03
|
|
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$
|
0.03
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Diluted
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
|
|
|
||||
Weighted average common shares outstanding:
|
|
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|
||||
Basic
|
196.7
|
|
|
195.4
|
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||
Diluted
|
201.2
|
|
|
195.4
|
|
|
Three Months Ended
|
||||||
|
November 3,
2018 |
|
October 28,
2017 |
||||
|
(millions)
(unaudited)
|
||||||
Net income
|
$
|
5.9
|
|
|
$
|
6.6
|
|
Other comprehensive loss, net of tax:
|
|
|
|
||||
Foreign currency translation adjustment
|
(0.4
|
)
|
|
(2.0
|
)
|
||
Total other comprehensive loss
|
(0.4
|
)
|
|
(2.0
|
)
|
||
Total comprehensive income
|
$
|
5.5
|
|
|
$
|
4.6
|
|
|
Three Months Ended
|
||||||
|
November 3,
2018 |
|
October 28,
2017 |
||||
|
(millions)
(unaudited)
|
||||||
Cash flows from operating activities:
|
|
||||||
Net income
|
$
|
5.9
|
|
|
$
|
6.6
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization expense
|
82.0
|
|
|
90.0
|
|
||
Deferred income tax benefit
|
5.8
|
|
|
18.7
|
|
||
Deferred rent and other occupancy costs
|
(10.4
|
)
|
|
(12.2
|
)
|
||
Stock-based compensation expense
|
4.7
|
|
|
6.0
|
|
||
Impairment of tangible assets
|
1.9
|
|
|
6.6
|
|
||
Non-cash interest expense
|
2.5
|
|
|
3.1
|
|
||
Gain on sale of fixed assets
|
(0.1
|
)
|
|
(2.0
|
)
|
||
Other non-cash income, net
|
(4.1
|
)
|
|
(4.9
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Inventories
|
(192.4
|
)
|
|
(104.9
|
)
|
||
Accounts payable, accrued liabilities and income tax liabilities
|
74.0
|
|
|
—
|
|
||
Deferred income
|
4.2
|
|
|
1.2
|
|
||
Lease-related liabilities
|
4.0
|
|
|
5.1
|
|
||
Other balance sheet changes, net
|
20.6
|
|
|
0.2
|
|
||
Net cash (used in) provided by operating activities
|
(1.4
|
)
|
|
13.5
|
|
||
|
|
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|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Capital expenditures
|
(38.7
|
)
|
|
(50.6
|
)
|
||
Proceeds from the sale of assets
|
0.4
|
|
|
9.7
|
|
||
Net cash used in investing activities
|
(38.3
|
)
|
|
(40.9
|
)
|
||
|
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|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Redemptions and repayments of term loan
|
—
|
|
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(22.5
|
)
|
||
Proceeds from revolver borrowings
|
—
|
|
|
232.5
|
|
||
Repayments of revolver borrowings
|
—
|
|
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(204.8
|
)
|
||
Tax payments related to share-based awards
|
(0.5
|
)
|
|
(0.2
|
)
|
||
Proceeds from stock options exercised and employee stock purchases
|
0.2
|
|
|
—
|
|
||
Net cash (used in) provided by financing activities
|
(0.3
|
)
|
|
5.0
|
|
||
|
|
|
|
||||
Net decrease in cash, cash equivalents and restricted cash
|
(40.0
|
)
|
|
(22.4
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
240.1
|
|
|
326.6
|
|
||
|
|
|
|
||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
200.1
|
|
|
$
|
304.2
|
|
|
Three Months Ended November 3, 2018
|
|||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total
Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
|
(millions)
|
|||||||||||||||||||||
|
(unaudited)
|
|||||||||||||||||||||
Balance, August 4, 2018
|
196.3
|
|
|
$
|
2.0
|
|
|
$
|
1,088.2
|
|
|
$
|
(278.8
|
)
|
|
$
|
(12.9
|
)
|
|
$
|
798.5
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
5.9
|
|
|
—
|
|
|
5.9
|
|
|||||
Total other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
|||||
Shares issued and equity grants made pursuant to stock-based compensation plans
|
1.1
|
|
|
—
|
|
|
4.8
|
|
|
(0.5
|
)
|
|
—
|
|
|
4.3
|
|
|||||
Cumulative effect of change in accounting upon adoption of ASC Topic 606
|
—
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
|
—
|
|
|
4.9
|
|
|||||
Balance, November 3, 2018
|
197.4
|
|
|
$
|
2.0
|
|
|
$
|
1,093.0
|
|
|
$
|
(268.5
|
)
|
|
$
|
(13.3
|
)
|
|
$
|
813.2
|
|
|
Three Months Ended October 28, 2017
|
|||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total
Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
|
(millions)
|
|||||||||||||||||||||
|
(unaudited)
|
|||||||||||||||||||||
Balance, July 29, 2017
|
195.1
|
|
|
$
|
2.0
|
|
|
$
|
1,068.2
|
|
|
$
|
(238.8
|
)
|
|
$
|
(10.4
|
)
|
|
$
|
821.0
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
6.6
|
|
|
—
|
|
|
6.6
|
|
|||||
Total other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|
(2.0
|
)
|
|||||
Shares issued and equity grants made pursuant to stock-based compensation plans
|
0.9
|
|
|
—
|
|
|
6.0
|
|
|
(0.2
|
)
|
|
—
|
|
|
5.8
|
|
|||||
Balance, October 28, 2017
|
196.0
|
|
|
$
|
2.0
|
|
|
$
|
1,074.2
|
|
|
$
|
(232.4
|
)
|
|
$
|
(12.4
|
)
|
|
$
|
831.4
|
|
|
|
Three Months Ended November 3, 2018
|
||||||||||
|
|
As Reported
|
|
Balances Without Adoption of ASU 2014-09
|
|
Impact of Adoption
|
||||||
|
|
(millions)
|
||||||||||
Net sales
|
|
$
|
1,591.8
|
|
|
$
|
1,606.5
|
|
|
$
|
(14.7
|
)
|
Cost of goods sold
|
|
(646.2
|
)
|
|
(646.9
|
)
|
|
0.7
|
|
|||
Gross margin
|
|
945.6
|
|
|
959.6
|
|
|
(14.0
|
)
|
|||
|
|
|
|
|
|
|
||||||
Operating income
|
|
38.9
|
|
|
52.9
|
|
|
(14.0
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income before provision for income taxes
|
|
13.7
|
|
|
27.7
|
|
|
(14.0
|
)
|
|||
Provision for income taxes
|
|
(7.8
|
)
|
|
(11.0
|
)
|
|
3.2
|
|
|||
Net income
|
|
$
|
5.9
|
|
|
$
|
16.7
|
|
|
$
|
(10.8
|
)
|
|
|
November 3, 2018
|
||||||||||
|
|
As Reported
|
|
Balances Without Adoption of ASU 2014-09
|
|
Impact of Adoption
|
||||||
|
|
(millions)
|
||||||||||
Assets
|
|
|
|
|
|
|
||||||
Inventories
|
|
$
|
829.6
|
|
|
$
|
814.6
|
|
|
$
|
15.0
|
|
Prepaid expenses and other current assets
|
|
254.5
|
|
|
245.8
|
|
|
8.7
|
|
|||
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|||||
Accrued expenses and other current liabilities
|
|
329.8
|
|
|
316.6
|
|
|
13.2
|
|
|||
Deferred income
|
|
140.3
|
|
|
123.9
|
|
|
16.4
|
|
|||
Accumulated deficit
|
|
(268.5
|
)
|
|
(274.4
|
)
|
|
5.9
|
|
|
|
As Reported August 4, 2018
|
|
Balances After Adoption of ASU 2014-09
|
|
Impact of Adoption
|
||||||
|
|
(millions)
|
||||||||||
Assets
|
|
|
|
|
|
|
||||||
Inventories
|
|
$
|
622.9
|
|
|
$
|
637.2
|
|
|
$
|
14.3
|
|
Prepaid expenses and other current assets
|
|
248.5
|
|
|
270.5
|
|
|
22.0
|
|
|||
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
||||||
Accrued expenses and other current liabilities
|
|
331.4
|
|
|
347.1
|
|
|
15.7
|
|
|||
Deferred income
|
|
121.7
|
|
|
137.4
|
|
|
15.7
|
|
|||
Accumulated deficit
|
|
(278.8
|
)
|
|
(273.9
|
)
|
|
4.9
|
|
|
November 3,
2018 |
|
August 4,
2018 |
|
October 28,
2017 |
||||||
|
(millions)
|
||||||||||
Cash and cash equivalents
|
$
|
198.9
|
|
|
$
|
238.9
|
|
|
$
|
303.0
|
|
Restricted cash included in:
|
|
|
|
|
|
||||||
Prepaid expenses and other current assets
|
1.2
|
|
|
1.2
|
|
|
1.2
|
|
|||
Total cash, cash equivalents and restricted cash
|
$
|
200.1
|
|
|
$
|
240.1
|
|
|
$
|
304.2
|
|
|
|
Three Months Ended
|
||||
|
|
November 3,
2018 |
|
October 28,
2017 |
||
Apparel
|
|
85
|
%
|
|
85
|
%
|
Accessories
|
|
11
|
%
|
|
12
|
%
|
Other
|
|
4
|
%
|
|
3
|
%
|
Total net sales
|
|
100
|
%
|
|
100
|
%
|
|
November 3,
2018 |
|
August 4,
2018 |
|
October 28, 2017
|
||||||
|
(millions)
|
||||||||||
Premium Fashion
|
$
|
309.7
|
|
|
$
|
212.2
|
|
|
$
|
255.3
|
|
Value Fashion
|
193.6
|
|
|
153.9
|
|
|
211.4
|
|
|||
Plus Fashion
|
182.6
|
|
|
153.0
|
|
|
173.7
|
|
|||
Kids Fashion
|
143.7
|
|
|
103.8
|
|
|
103.8
|
|
|||
Total inventories
|
$
|
829.6
|
|
|
$
|
622.9
|
|
|
$
|
744.2
|
|
|
Three Months Ended
|
||||||
|
November 3,
2018 |
|
October 28,
2017 |
||||
|
(millions)
|
||||||
Premium Fashion
|
$
|
0.1
|
|
|
$
|
—
|
|
Value Fashion
(a)
|
1.7
|
|
|
3.2
|
|
||
Plus Fashion
|
—
|
|
|
1.7
|
|
||
Kids Fashion
|
0.1
|
|
|
0.6
|
|
||
Total impairment charges
|
$
|
1.9
|
|
|
$
|
5.5
|
|
|
Three Months Ended
|
||||||
|
November 3,
2018 |
|
October 28,
2017 |
||||
|
(millions)
|
||||||
Cash restructuring charges:
|
|
|
|
||||
Severance and benefit costs
(a)
|
$
|
(0.5
|
)
|
|
$
|
3.9
|
|
Other related charges
(b)
|
8.4
|
|
|
17.2
|
|
||
Total cash charges
|
7.9
|
|
|
21.1
|
|
||
|
|
|
|
||||
Non-cash charges:
|
|
|
|
||||
Impairment of assets
(c)
|
—
|
|
|
1.1
|
|
||
Total non-cash charges
|
—
|
|
|
1.1
|
|
||
|
|
|
|
||||
Total restructuring and other related charges
|
$
|
7.9
|
|
|
$
|
22.2
|
|
|
Severance and benefit costs
|
|
Other related charges
|
|
Total
|
||||||
|
(millions)
|
||||||||||
Balance at August 4, 2018
|
$
|
4.1
|
|
|
$
|
6.0
|
|
|
$
|
10.1
|
|
Additions charged to expense
|
(0.5
|
)
|
|
8.4
|
|
|
7.9
|
|
|||
Cash payments
|
(1.7
|
)
|
|
(10.7
|
)
|
|
(12.4
|
)
|
|||
Balance at November 3, 2018
|
$
|
1.9
|
|
|
$
|
3.7
|
|
|
$
|
5.6
|
|
Debt consists of the following:
|
November 3,
2018 |
|
August 4,
2018 |
||||
|
(millions)
|
||||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
—
|
|
Less: unamortized debt issuance costs
(a)
|
(4.0
|
)
|
|
(4.3
|
)
|
||
|
(4.0
|
)
|
|
(4.3
|
)
|
||
|
|
|
|
|
|
||
Term loan
|
1,371.5
|
|
|
1,371.5
|
|
||
Less: unamortized original issue discount
(b)
|
(16.9
|
)
|
|
(18.0
|
)
|
||
unamortized debt issuance costs
(b)
|
(19.4
|
)
|
|
(20.5
|
)
|
||
|
1,335.2
|
|
|
1,333.0
|
|
||
Total long-term debt
|
$
|
1,331.2
|
|
|
$
|
1,328.7
|
|
Fiscal Year
|
|
Amount
|
||
|
|
(millions)
|
||
2019
|
|
$
|
—
|
|
2020
|
|
—
|
|
|
2021
|
|
66.5
|
|
|
2022
|
|
90.0
|
|
|
2023
|
|
1,215.0
|
|
|
Total maturities
|
|
$
|
1,371.5
|
|
Level 1
|
Quoted prices for identical instruments in active markets;
|
Level 2
|
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are recently traded (not active); and
|
Level 3
|
Instruments with little, if any, market activity are valued using significant unobservable inputs or valuation techniques.
|
|
Three Months Ended
|
||||
|
November 3,
2018 |
|
October 28,
2017 |
||
|
(millions)
|
||||
Basic
|
196.7
|
|
|
195.4
|
|
Dilutive effect of stock options and restricted stock units
(a)
|
4.5
|
|
|
—
|
|
Diluted shares
|
201.2
|
|
|
195.4
|
|
|
Three Months Ended
|
||||||
|
November 3,
2018 |
|
October 28,
2017 |
||||
|
(millions)
|
||||||
Compensation expense
|
$
|
4.7
|
|
|
$
|
6.0
|
|
Income tax benefit
|
$
|
1.0
|
|
|
$
|
2.3
|
|
|
Three Months Ended
|
||||||
|
November 3,
2018 |
|
October 28,
2017 |
||||
Expected term (years)
|
5.2
|
|
|
5.1
|
|
||
Expected volatility
|
47.5
|
%
|
|
43.7
|
%
|
||
Risk-free interest rate
|
2.9
|
%
|
|
1.9
|
%
|
||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
||
Weighted-average grant date fair value
|
$
|
1.78
|
|
|
$
|
0.97
|
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise Price
|
|
Weighted-
Average
Remaining
Contractual
Terms
|
|
Aggregate
Intrinsic
Value
(a)
|
|||||
|
(thousands)
|
|
|
|
|
(years)
|
|
(millions)
|
||||
Options outstanding – August 4, 2018
|
19,307.9
|
|
|
$
|
8.97
|
|
|
4.2
|
|
$
|
9.3
|
|
Granted
|
4,474.4
|
|
|
3.91
|
|
|
|
|
|
|||
Exercised
|
(22.6
|
)
|
|
2.37
|
|
|
|
|
|
|||
Canceled/Forfeited
|
(1,522.3
|
)
|
|
9.72
|
|
|
|
|
|
|||
Options outstanding – November 3, 2018
|
22,237.4
|
|
|
$
|
7.91
|
|
|
4.8
|
|
$
|
8.5
|
|
|
|
|
|
|
|
|
|
|||||
Options vested and expected to vest at November 3, 2018
(b)
|
21,763.1
|
|
|
$
|
8.00
|
|
|
4.8
|
|
$
|
8.3
|
|
Options exercisable at November 3, 2018
|
12,890.3
|
|
|
$
|
11.02
|
|
|
3.7
|
|
$
|
3.1
|
|
(a)
|
The intrinsic value is the amount by which the market price at the end of the period of the underlying share of stock exceeds the exercise price of the stock option.
|
(b)
|
The number of options expected to vest takes into consideration estimated expected forfeitures.
|
|
Service-based
Restricted Equity Awards
|
|||||
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|||
|
(thousands)
|
|
|
|||
Nonvested at August 4, 2018
|
4,171.3
|
|
|
$
|
4.57
|
|
Granted
|
265.0
|
|
|
3.78
|
|
|
Vested
|
(1,133.2
|
)
|
|
6.50
|
|
|
Canceled/Forfeited
|
(32.9
|
)
|
|
11.43
|
|
|
Nonvested at November 3, 2018
|
3,270.2
|
|
|
$
|
3.78
|
|
•
|
Premium Fashion
segment – consists primarily of the specialty retail, outlet and direct channel operations of the
Ann Taylor
and
LOFT
brands.
|
•
|
Value Fashion
segment – consists of the specialty retail, outlet and direct channel operations of the
maurices
and
dressbarn
brands.
|
•
|
Plus Fashion
segment – consists of the specialty retail, outlet and direct channel operations of the
Lane Bryant
and
Catherines
brands.
|
•
|
Kids Fashion
segment – consists of the specialty retail, outlet, direct channel and licensing operations of the
Justice
brand.
|
|
Three Months Ended
|
|
||||||
|
November 3,
2018 |
|
October 28,
2017 |
|
||||
|
(millions)
|
|
||||||
Net sales
(a)
:
|
|
|
|
|
|
|
||
Premium Fashion
|
$
|
596.0
|
|
|
$
|
555.1
|
|
|
Value Fashion
|
444.4
|
|
|
471.3
|
|
|
||
Plus Fashion
|
285.4
|
|
|
304.2
|
|
|
||
Kids Fashion
|
266.0
|
|
|
259.1
|
|
|
||
Total net sales
|
$
|
1,591.8
|
|
|
$
|
1,589.7
|
|
|
|
|
|
|
|
||||
Operating income
(a)
:
|
|
|
|
|
|
|
||
Premium Fashion
|
$
|
54.6
|
|
|
$
|
38.5
|
|
|
Value Fashion
|
(6.2
|
)
|
|
10.9
|
|
|
||
Plus Fashion
|
(12.0
|
)
|
|
(0.9
|
)
|
|
||
Kids Fashion
|
10.4
|
|
|
15.7
|
|
|
||
Unallocated acquisition and integration expenses
|
—
|
|
|
(2.1
|
)
|
|
||
Unallocated restructuring and other related charges
(b)
|
(7.9
|
)
|
|
(22.2
|
)
|
|
||
Total operating income
|
$
|
38.9
|
|
|
$
|
39.9
|
|
|
|
|
|
|
|
||||
Depreciation and amortization expense:
|
|
|
|
|
|
|
||
Premium Fashion
|
$
|
30.3
|
|
|
$
|
32.9
|
|
|
Value Fashion
|
23.0
|
|
|
26.3
|
|
|
||
Plus Fashion
|
14.4
|
|
|
15.4
|
|
|
||
Kids Fashion
|
14.3
|
|
|
15.4
|
|
|
||
Total depreciation and amortization expense
|
$
|
82.0
|
|
|
$
|
90.0
|
|
|
|
Three Months Ended
|
||||||
|
November 3,
2018 |
|
October 28,
2017 |
||||
|
(millions)
|
||||||
Cash related charges
(i)
:
|
|
|
|
|
|
||
Severance and benefit costs:
|
|
|
|
||||
Premium Fashion
|
$
|
—
|
|
|
$
|
1.4
|
|
Value Fashion
|
—
|
|
|
(1.2
|
)
|
||
Plus Fashion
|
—
|
|
|
4.7
|
|
||
Kids Fashion
|
(0.1
|
)
|
|
(0.3
|
)
|
||
Corporate
|
(0.4
|
)
|
|
(0.7
|
)
|
||
Total severance and benefit costs
|
(0.5
|
)
|
|
3.9
|
|
||
Professional fees and other related charges:
|
|
|
|
||||
Plus Fashion
|
(0.1
|
)
|
|
1.2
|
|
||
Corporate
|
8.5
|
|
|
16.0
|
|
||
Total professional fees and other related charges
|
8.4
|
|
|
17.2
|
|
||
Total cash related charges
|
7.9
|
|
|
21.1
|
|
||
|
|
|
|
||||
Non-cash charges:
|
|
|
|
||||
Impairment of assets:
|
|
|
|
||||
Value Fashion
|
—
|
|
|
1.1
|
|
||
Total non-cash charges
|
—
|
|
|
1.1
|
|
||
Total restructuring and other related charges
|
$
|
7.9
|
|
|
$
|
22.2
|
|
|
Three Months Ended
|
||||||
Cash Interest and Taxes:
|
November 3,
2018 |
|
October 28,
2017 |
||||
|
(millions)
|
||||||
Cash paid for interest
|
$
|
23.8
|
|
|
$
|
30.9
|
|
Cash paid for income taxes
|
$
|
1.3
|
|
|
$
|
1.8
|
|
•
|
Comparable sales increased by
3%
, reflecting increases at our
Premium Fashion
and
Kids Fashion
segments, offset in part by declines at our
Value Fashion
and
Plus Fashion
segments;
|
•
|
Operating income was
$38.9 million
compared to
$39.9 million
in the year-ago period; and
|
•
|
Net income per diluted share was
$0.03
in both periods.
|
•
|
Cash used in operations was
$1.4 million
in Fiscal 2019 compared to
$13.5 million
of cash provided by operations in the year-ago period; and
|
•
|
Capital expenditures were $
38.7 million
compared to
$50.6 million
in the year-ago period.
|
|
Three Months Ended
|
|
|
|||||||||||
|
November 3, 2018
|
|
October 28,
2017 |
|
$ Change
|
|
% Change
|
|||||||
|
(millions, except per share data)
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,591.8
|
|
|
$
|
1,589.7
|
|
|
$
|
2.1
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|||||||
Cost of goods sold
|
(646.2
|
)
|
|
(624.6
|
)
|
|
(21.6
|
)
|
|
(3.5
|
)%
|
|||
Cost of goods sold as % of net sales
|
40.6
|
%
|
|
39.3
|
%
|
|
|
|
|
|
|
|||
Gross margin
|
945.6
|
|
|
965.1
|
|
|
(19.5
|
)
|
|
(2.0
|
)%
|
|||
Gross margin as % of net sales
|
59.4
|
%
|
|
60.7
|
%
|
|
|
|
|
|
|
|||
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Buying, distribution and occupancy expenses
|
(314.7
|
)
|
|
(318.1
|
)
|
|
3.4
|
|
|
1.1
|
%
|
|||
BD&O expenses as % of net sales
|
19.8
|
%
|
|
20.0
|
%
|
|
|
|
|
|
|
|||
Selling, general and administrative expenses
|
(502.1
|
)
|
|
(492.8
|
)
|
|
(9.3
|
)
|
|
(1.9
|
)%
|
|||
SG&A expenses as % of net sales
|
31.5
|
%
|
|
31.0
|
%
|
|
|
|
|
|
|
|||
Acquisition and integration expenses
|
—
|
|
|
(2.1
|
)
|
|
2.1
|
|
|
NM
|
|
|||
Restructuring and other related charges
|
(7.9
|
)
|
|
(22.2
|
)
|
|
14.3
|
|
|
64.4
|
%
|
|||
Depreciation and amortization expense
|
(82.0
|
)
|
|
(90.0
|
)
|
|
8.0
|
|
|
8.9
|
%
|
|||
Total other operating expenses
|
(906.7
|
)
|
|
(925.2
|
)
|
|
18.5
|
|
|
2.0
|
%
|
|||
Operating income
|
38.9
|
|
|
39.9
|
|
|
(1.0
|
)
|
|
(2.5
|
)%
|
|||
Operating income as % of net sales
|
2.4
|
%
|
|
2.5
|
%
|
|
|
|
|
|
|
|||
Interest expense
|
(26.0
|
)
|
|
(26.6
|
)
|
|
0.6
|
|
|
2.3
|
%
|
|||
Interest income and other income, net
|
0.8
|
|
|
0.2
|
|
|
0.6
|
|
|
NM
|
|
|||
Income before provision for income taxes
|
13.7
|
|
|
13.5
|
|
|
0.2
|
|
|
1.5
|
%
|
|||
Provision for income taxes
|
(7.8
|
)
|
|
(6.9
|
)
|
|
(0.9
|
)
|
|
(13.0
|
)%
|
|||
Effective tax rate
(a)
|
56.9
|
%
|
|
51.1
|
%
|
|
|
|
|
|
|
|||
Net income
|
$
|
5.9
|
|
|
$
|
6.6
|
|
|
$
|
(0.7
|
)
|
|
(10.6
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
—
|
|
|
NM
|
|
Diluted
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
—
|
|
|
NM
|
|
(a)
|
Effective tax rate is calculated by dividing the Provision for income taxes by the Income before provision for income taxes.
|
|
Three Months Ended
|
|
|
|||||||||||
|
November 3,
2018 |
|
October 28,
2017 |
|
$ Change
|
|
% Change
|
|||||||
|
(millions)
|
|
|
|
|
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Premium Fashion
|
$
|
596.0
|
|
|
$
|
555.1
|
|
|
$
|
40.9
|
|
|
7.4
|
%
|
Value Fashion
|
444.4
|
|
|
471.3
|
|
|
(26.9
|
)
|
|
(5.7
|
)%
|
|||
Plus Fashion
|
285.4
|
|
|
304.2
|
|
|
(18.8
|
)
|
|
(6.2
|
)%
|
|||
Kids Fashion
|
266.0
|
|
|
259.1
|
|
|
6.9
|
|
|
2.7
|
%
|
|||
Total net sales
|
$
|
1,591.8
|
|
|
$
|
1,589.7
|
|
|
$
|
2.1
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|||||||
Comparable sales
(a)(b)
|
|
|
|
|
|
|
|
|
|
3
|
%
|
(b)
|
During the first quarter of Fiscal 2019, vouchers distributed in the first quarter of Fiscal 2018 in connection with the
Justice
pricing litigation, discussed more fully in Note 14 to the unaudited condensed consolidated financial statements, continued to be redeemed through October 2018. Comparable sales related to these transactions includes the transaction value in excess of the voucher value.
|
•
|
a
7%
comparable sales increase of
$12.3 million
at
Ann Taylor
and a
9%
comparable sales increase of
$31.3 million
at
LOFT
during the three months ended
November 3, 2018
;
|
•
|
a
$0.3 million
increase in non-comparable sales, comprised of:
|
–
|
a
$4.6 million
increase from the net positive impact of
7
new
LOFT
store openings in the last twelve months partially offset by
16
LOFT
store closures, and
|
–
|
a
$4.3 million
decline from
17
net
Ann Taylor
store closures
in the last twelve months; and
|
•
|
a
$3.0 million
decline in other revenues primarily reflecting unfavorable timing related to the adoption of the new revenue recognition accounting standard.
|
•
|
a
4%
comparable sales decline of
$7.3 million
at
dressbarn
and a
3%
comparable sales decline of
$6.8 million
at
maurices
during the three months ended
November 3, 2018
;
|
•
|
a
$13.4 million
decline in non-comparable sales, comprised of:
|
–
|
an
$8.5 million
decline from
49
dressbarn
store closures in the last twelve months, and
|
–
|
a
$4.9 million
decline from
47
net
maurices
store closures in the last twelve months; and
|
•
|
a
$0.6 million
increase in other revenues.
|
•
|
a
2%
comparable sales decline of
$3.8 million
at
Lane Bryant
and a
3%
comparable sales decline of
$2.2 million
at
Catherines
during the three months ended
November 3, 2018
;
|
•
|
a
$7.8 million
decline in non-comparable sales, comprised of:
|
–
|
a
$7.5 million
decline from
17
net
Lane Bryant
store closures in the last twelve months, and
|
–
|
a
$0.3 million
decline from
10
Catherines
store closures in the last twelve months; and
|
•
|
a
$5.0 million
decline in other revenues primarily reflecting unfavorable timing related to the adoption of the new revenue recognition accounting standard.
|
•
|
a
12%
comparable sales increase of
$27.9 million
at
Justice
during the three months ended
November 3, 2018
;
|
•
|
a
$25.9 million
decline in non-comparable sales primarily due to Fiscal 2019 including one less week of peak sales during the back-to-school shopping period compared to Fiscal 2018, which resulted from the 53
rd
week recorded at the end of Fiscal 2018, as well as
49
Justice
store closures in the last twelve months; and
|
•
|
a
$4.9 million
increase in other revenues primarily due to higher wholesale revenue.
|
•
|
Premium Fashion
gross margin rate
performance improved by approximately 90 basis points, reflecting strong product acceptance at both
LOFT
and
Ann Taylor
, which resulted in a higher mix of full price selling, offset in part by higher shipping costs related to increased direct channel penetration.
|
•
|
Value Fashion
gross margin rate
performance declined approximately 190 basis points, caused by:
|
–
|
a 270 basis point decline at
maurices
, reflecting the need for greater markdown requirements to clear underperforming inventory receipts from the transitional August and September period, and higher shipping costs related to increased direct channel penetration, and
|
–
|
a 90 basis point decline at
dressbarn
, primarily reflecting an earlier sell-off of seasonal markdown inventory versus the year-ago period.
|
•
|
Plus Fashion
gross margin rate
performance declined by approximately 290 basis points, caused by comparable sales decreases at both
Lane Bryant
and
Catherines
reflecting the need for greater markdown requirements to clear underperforming inventory receipts, and higher shipping costs related to increased direct channel penetration.
|
•
|
Kids Fashion
gross margin
rate
performance declined approximately 340 basis points as a result of the shift of a high margin, peak back-to-school selling week from the first quarter of Fiscal 2019 to the fourth quarter of Fiscal 2019 as a result of the 53
rd
week recorded at the end of Fiscal 2018, unfavorable product mix and higher shipping costs related to increased direct channel penetration.
|
|
Three Months Ended
|
|
|
|||||||||||
|
November 3,
2018 |
|
October 28,
2017 |
|
$ Change
|
|
% Change
|
|||||||
|
(millions)
|
|
|
|
|
|||||||||
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Premium Fashion
|
$
|
54.6
|
|
|
$
|
38.5
|
|
|
$
|
16.1
|
|
|
41.8
|
%
|
Value Fashion
|
(6.2
|
)
|
|
10.9
|
|
|
(17.1
|
)
|
|
(156.9
|
)%
|
|||
Plus Fashion
|
(12.0
|
)
|
|
(0.9
|
)
|
|
(11.1
|
)
|
|
NM
|
|
|||
Kids Fashion
|
10.4
|
|
|
15.7
|
|
|
(5.3
|
)
|
|
(33.8
|
)%
|
|||
Unallocated acquisition and integration expenses
|
—
|
|
|
(2.1
|
)
|
|
2.1
|
|
|
NM
|
|
|||
Unallocated restructuring and other related charges
|
(7.9
|
)
|
|
(22.2
|
)
|
|
14.3
|
|
|
64.4
|
%
|
|||
Total operating income
|
$
|
38.9
|
|
|
$
|
39.9
|
|
|
$
|
(1.0
|
)
|
|
(2.5
|
)%
|
|
Three Months Ended
|
||||||
|
November 3,
2018 |
|
October 28,
2017 |
||||
|
(millions)
|
||||||
Net cash (used in) provided by operating activities
|
$
|
(1.4
|
)
|
|
$
|
13.5
|
|
Net cash used in investing activities
|
(38.3
|
)
|
|
(40.9
|
)
|
||
Net cash (used in) provided by financing activities
|
(0.3
|
)
|
|
5.0
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
$
|
(40.0
|
)
|
|
$
|
(22.4
|
)
|
Period
|
|
Total
Number of
Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Plans or Programs
(a)
|
||||
Month # 1 (August 5, 2018 – September 1, 2018)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$ 181 million
|
Month # 2 (September 2, 2018 – October 6, 2018)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$ 181 million
|
Month # 3 (October 7, 2018 – November 3, 2018)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$ 181 million
|
Exhibit
|
|
Description
|
|
|
|
|
Second Amended and Restated By-laws, effective October 3, 2018, is incorporated by reference to Exhibit 3.1 to the Form 8-K filed on October 9, 2018.
|
|
|
|
|
|
Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
|
|
Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
|
|
Certification of David Jaffe pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
|
|
Certification of Robb Giammatteo pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
|
101.INS
|
|
XBRL Instance Document†
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document†
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document†
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document†
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document†
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document†
|
|
ASCENA RETAIL GROUP, INC.
|
|
|
Date: December 10, 2018
|
BY: /s/ David Jaffe
|
|
David Jaffe
|
|
Chairman and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
Date: December 10, 2018
|
BY: /s/ Robb Giammatteo
|
|
Robb Giammatteo
|
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
/s/ David Jaffe
|
David Jaffe
|
Chairman and Chief Executive Officer
|
/s/ Robb Giammatteo
|
Robb Giammatteo
|
Executive Vice President and Chief Financial Officer
|
/s/ David Jaffe
|
David Jaffe
|
Chairman and Chief Executive Officer
|
Date: December 10, 2018
|
/s/ Robb Giammatteo
|
Robb Giammatteo
|
Executive Vice President and Chief Financial Officer
|
Date: December 10, 2018
|