Apparel giant in store closing move amid sales drop
Ascena Retail Group, operators of such brands as Ann Taylor, Lane Bryant and Dressbarn, is planning to close hundreds of stores. The news came on the heels of a brutal quarter.
The company reported a net loss of $1.031 billion, or $5.29 per diluted share in its third quarter, ended April 29, which included a non-cash, pre-tax impairment charge of $1.3 billion to write down the company’s goodwill and other intangible assets. This compared to net income of $15 million last year, or $0.08 per diluted share, in the year-ago quarter.
Net sales fell to $1.565 billion, down from $1.669 billion in the year-ago period. Total same-store sales fell 8% amid a decline in store traffic across all brands. By banner, same-store sales were down 7% at Ann Taylor; 6% at Loft; 12% at Maurices; 8% at Dressbarn; 11% at Catherines; 6% at Justice; and 6% at Total Kids Fashion.
Ascena currently operates over 4,800 stores throughout the U.S. Canada, and Puerto Rico. On the chain's earnings call, president and CEO David Jaffe said the company will close more than 250 locations by July 2017. An additional 400 stores could close, Jaffe said, if the company can't negotiate reduced rent with landlords.
"Over the next two years, we expect to close or achieve substantial rent reductions in more than 650 stores, which represent almost 25% of the total store population with lease term maturity between 2017 and July of 2019," Jaffe said. "We expect our fleet optimization program will be earning accretive and will deliver working capital benefits."
No particular store brand is being targeted for the store closures.
"The store closings are determined by individual stores, not by the brand," said Brian Lynchs. There is no overarching brand point of view. It's literally the economics of the individual stores.
Jaffe said the chain's third quarter performance reflected an extremely competitive market environment, characterized by persistent store traffic declines and intense commercial activity for the chain's third performance. And he sees no let-up in sight.
"We expect these factors will remain major headwinds for the foreseeable future and reflect an accelerated shift to consumer demand toward ecommerce," Jaffe said. "Responding to the shift requires fundamental changes in retail operating model, and we’ve made significant progress toward transforming our business to compete in this new environment."
Digital directory keeps Mall of America traffic moving
Traffic is good at the Mall of America. Arguably Minnesota’s biggest tourist attraction, the 5.5 million-sq.-ft. theme-park-cum-shopping center packs in some 40 million visitors a year. The big challenge for owner Triple Five is how to keep that traffic moving, experiencing, and spending instead of seeking out directions.
Mall management appears to have found the answer with a digital concierge serve that guests can install on cellphones for step-by-step directions to specific shops or a live text sessions with mall staff. Drawing from more than 800,000 sessions on the ESP, or enhanced service portal, Mall of America has noted an average dwell time of 40 seconds on the app versus three minutes at physical directories.
“We want our guests to spend their time having fun at MOA, not searching for answers,” said Jill Renslow, the mega-mall’s senior VP of marketing and business development.
The directories are built on Google’s Chrome OS platform, which makes them easy to use, according to Jeffery Sarenpa of Minnesota-based Express Image, which developed the system.
“Chrome OS removes typical operating system headaches and allows us to focus on what we feel is most important – building immersive, effective experiences for our customers and their end users,” he said.
To accommodate MOA’s high percentage of international visitors, the directories are made available in nine languages: Spanish, French, German, Chinese, Somali, Portuguese, Hmong, Japanese, and Arabic.
Warehouse club operator entering new territory
BJ's Wholesale Club is set to open its first location in South Carolina.
The retailer will celebrate the grand opening of its new location in Summerville, South Carolina on Saturday, June 10. The store, which marks BJ's expansion into South Carolina, is located at the intersection of Interstate 26 and North Main Street, Summerville's primary retail corridor.
Recently, BJ's announced that its continuing its expansion plans with a new location in Hanover Township, New Jersey. It is expected to open in summer 2018.
BJ's is headquartered in Westborough, Massachusetts. The company currently operates 215 clubs and 132 BJ's Gas locations in 16 states.