Maurices parent company posts big loss, announces store closures
Ascena Retail Group, the parent company of Duluth-based Maurices, has reported a $1 billion quarterly loss tied to a massive write-down and a continued decline in sales, and says it may close up to 650 stores.
Calling for a "leaner, more-profitable Ascena," CEO David Jaffe said in an investor call Thursday afternoon that 250 stores across the company's seven brands will close and an additional 400 could close if better leases can not be negotiated in the next two years. That would put a big dent in the corporation's 4,850 locations, more than 1,000 of which are Maurices stores.
The move comes amid "unprecedented store traffic decline," Jaffe said, as well as a bottoming-out of the company's stock price recently and a consistent drop in sales.
Sales fell to $1.5 billion in the company's fiscal quarter that ended April 29, down 8 percent from the same period last year.
"Make no mistake, we were very disappointed in our performance in the quarter," Jaffe said.
A $1.3 billion write-down propelled the quarterly loss to $5.22 per diluted share.
"This impairment charge has no impact on the company's operations, ability to service debt, compliance with financial covenants, or underlying liquidity," Chief Financial Officer Robb Giammatteo said during Thursday's call.
The company reported it had $300 million cash on hand, $749 million in total liquidity and $1.6 billion in debt as of April 29.
Giammatteo said another 8 percent drop in sales is expected for the next quarter.
Of Ascena's brands — Ann Taylor, Loft, Maurices, Dressbarn, Lane Bryant, Catherines and Justice — Maurices performed the worst, with sales down 12 percent this quarter compared to the same period in 2016. The women's retail chain remained at 1,021 locations at the end of the quarter as four new stores opened and four closed.
Ascena's stock closed down 2 percent at $1.82 per share on Thursday; the earnings report was released after the market closed. The stock has traded as high as $9.12 and as low as $1.65 in the past 52 weeks.