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Ascena Retail Group, Inc. Reports Fourth Quarter And Fiscal Year 2013 Results

Non-GAAP Financial Results

Ascena’s financial results for its fiscal fourth quarter and full year ended July 27, 2013 reflect certain acquisition-related integration, restructuring and transaction costs in connection with the Charming Acquisition. Additionally, the Company also incurred in Fiscal 2013 certain charges related to the extinguishment of debt and accelerated depreciation of certain assets that will ultimately be displaced by the Company’s supply chain and technology integration efforts. Management believes that all of such costs are not indicative of the Company’s underlying operating performance. As such, adjusted results for both the fourth quarter and full year of Fiscal 2013 and Fiscal 2012, which exclude the effect of such costs, have been presented to supplement the reported results for each period. Reference should be made to Note 2 of the unaudited consolidated financial information included elsewhere in this release for a reconciliation of adjusted, non-GAAP financial measures to the most directly comparable GAAP financial measures.
 

Ascena Retail Group, Inc.

Consolidated Statements of Operations (Unaudited)

(millions, except per share data)
 
Fourth Quarter Ended
July 27, 2013  

% of Net Sales
  July 28, 2012  

% of Net Sales
Net sales $1,197.7   100.0 %   $939.7 100.0 %
Cost of goods sold (526.1 ) (43.9 %) (438.1 ) (46.6 %)
Gross margin 671.6 56.1 % 501.6 53.4 %
Other costs and expenses:
Buying, distribution and occupancy expenses (209.4 ) (17.5 %) (156.9 ) (16.7 %)
Selling, general and administrative expenses (335.9 ) (28.0 %) (256.3 ) (27.3 %)

Acquisition-related, integration andrestructuring costs
(14.5 ) (1.2 %) (25.4 ) (2.7 %)
Depreciation and amortization expense (53.5 ) (4.5 %) (32.2 ) (3.4 %)
Operating income 58.3   4.9 % 30.8   3.3 %
Interest expense (1.3 ) (0.1 %) (3.6 ) (0.4 %)
Interest and other income (expense), net (0.2 ) -- 2.0 0.2 %
Acquisition-related, transaction costs --   -- (7.2 ) (0.8 %)

Income from continuing operations beforeprovision for income taxes
56.8 4.7 % 22.0 2.3 %

Provision for income taxes from continuingoperations
(18.5 ) (1.5 %) (10.8 ) (1.1 %)
Income from continuing operations 38.3 3.2 % 11.2 1.2 %

Loss from discontinued operations, net oftaxes
(8.5 ) (0.7 %) (9.6 ) (1.0 %)
Net income $29.8   2.5 % $1.6   0.2 %
 
Net income (loss) per common share - basic:
Continuing operations $0.24   $0.07  
Discontinued operations ($0.05 )

($0.06

)

 

Total net income per basic common share
$0.19   $0.01  
 
Net income (loss) per common share - diluted:
Continuing operations $0.23   $0.07  
Discontinued operations ($0.05 ) ($0.06

)

 

Total net income per diluted common share
$0.18   $0.01  
 
Weighted average common shares outstanding:
Basic 158.5   154.0  
Diluted 163.8   159.7  

See accompanying notes.
 

Ascena Retail Group, Inc.

Consolidated Statements of Operations (Unaudited)

(millions, except per share data)
 
Fiscal Year Ended
July 27, 2013  

% of Net Sales
  July 28, 2012  

% of Net Sales
Net sales $4,714.9   100.0 %   $3,353.3 100.0 %
Cost of goods sold (2,066.8 ) (43.8 %) (1,474.7 ) (44.0 %)
Gross margin 2,648.1 56.2 % 1,878.6 56.0 %
Other costs and expenses:
Buying, distribution and occupancy expenses (822.4 ) (17.4 %) (542.3 ) (16.2 %)
Selling, general and administrative expenses (1,349.8 ) (28.6 %) (910.9 ) (27.2 %)

Acquisition-related, integration andrestructuring costs
(34.6 ) (0.7 %) (25.4 ) (0.8 %)
Depreciation and amortization expense (176.0 ) (3.7 %) (107.4 ) (3.2 %)
Operating income 265.3   5.6 % 292.6   8.7 %
Interest expense (13.8 ) (0.3 %) (4.3 ) (0.1 %)
Interest and other income, net 0.4 -- 4.7 0.1 %
Acquisition-related, transaction costs -- -- (14.0 ) (0.4 %)
Loss on extinguishment of debt (9.3 ) (0.2 %) --   --

Income from continuing operations beforeprovision for income taxes
242.6 5.1 % 279.0 8.3 %

Provision for income taxes from continuingoperations
(87.4 ) (1.9 %) (107.2 ) (3.2 %)
Income from continuing operations 155.2 3.3 % 171.8 5.1 %

Loss from discontinued operations, net oftaxes
(3.9 ) (0.1 %) (9.6 ) (0.3 %)
Net income $151.3   3.2 % $162.2   4.8 %
 
Net income (loss) per common share - basic:
Continuing operations $0.99   $1.12  
Discontinued operations ($0.03 ) ($0.06 )

Total net income per basic common share
$0.96   $1.06  
 
Net income (loss) per common share - diluted:
Continuing operations $0.95   $1.08  
Discontinued operations ($0.02 ) ($0.06 )

Total net income per diluted common share
$0.93   $1.02  
 
Weighted average common shares outstanding:
Basic 157.3   153.5  
Diluted 163.3   159.4  

See accompanying notes.
 

Ascena Retail Group, Inc.

Consolidated Balance Sheets (Unaudited)

(millions)
 

July 27, 2013
   

July 28, 2012
 
ASSETS
 
Current assets:
Cash and cash equivalents $186.4 $164.3
Short-term investments 3.0 1.4
Inventories 540.9 533.4
Assets related to discontinued operations 38.8 133.6
Deferred tax assets 53.0 48.7
Prepaid expenses and other current assets 120.7 123.2
Total current assets 942.8 1,004.6
Property and equipment, net 824.8 674.2
Goodwill 581.4 593.2
Other intangible assets, net 451.1 453.7
Other assets 71.6 81.4
Total Assets $2,871.7 $2,807.1
 
LIABILITIES AND EQUITY
 
Current liabilities:
Accounts payable $259.2 $252.8

Accrued expenses and other currentliabilities
301.4 261.2
Deferred income 61.2 42.7

Liabilities related to discontinuedoperations
21.5 118.6
Income taxes payable 8.7 6.1
Current portion of long-term debt 0.6 4.2
Total current liabilities 652.6 685.6
 
Long-term debt 135.0 322.4
Lease-related liabilities 242.9 240.5
Deferred income taxes 131.7 60.6
Other non-current liabilities 153.1 157.1
Total liabilities 1,315.3 1,466.2
Equity 1,556.4 1,340.9
Total Liabilities and Equity $2,871.7 $2,807.1

See accompanying notes.
 

Ascena Retail Group, Inc.

Segment Information (Unaudited)

(millions)
 
  Fourth Quarter Ended   Full Year Ended

July 27, 2013
 

July 28, 2012

July 27, 2013
 

July 28, 2012
Net sales:
Justice $309.2 $291.7 $1,407.4 $1,306.7
Lane Bryant 293.7 119.7 1,050.1 119.7
maurices 216.6 201.5 917.6 852.9
dressbarn 290.0 290.4 1,020.7 1,037.6
Catherines 88.2   36.4   319.1   36.4  
Total net sales $1,197.7   $939.7   $4,714.9   $3,353.3  
 
 
Fourth Quarter Ended Full Year Ended

July 27, 2013

July 28, 2012

July 27, 2013

July 28, 2012
Operating income (loss):
Justice $14.2 $24.3 $182.3 $172.5
Lane Bryant (2.4 ) (10.1 ) (30.1 ) (10.1 )
maurices 14.7 14.7 107.0 102.7
dressbarn 40.0 31.3 30.3 56.9
Catherines 6.3   (4.0 ) 10.4   (4.0 )
Subtotal 72.8 56.2 299.9 318.0

Less unallocated acquisition-related,integration and restructuring costs
(14.5 ) (25.4 ) (34.6 ) (25.4 )
Total operating income $58.3   $30.8   $265.3   $292.6  

See accompanying notes.

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