– First Quarter GAAP EPS Loss of $0.10;
Adjusted EPS Earnings of $0.36 –
– First Quarter Comparable Sales Down 3%
–
– Company Reaffirms Fiscal 2016 Full Year
EPS Guidance Range $0.75- $0.80-
ascena retail group, inc. (NASDAQ:ASNA) (the “Company”)
today reported financial results for its fiscal first quarter ended
October 24, 2015. All adjusted results presented as comparable
throughout this release include the results of ANN INC. in both the
current and prior-year periods for a full 13 week period. Reference
should be made to the notes to the accompanying unaudited condensed
consolidated financial information for a discussion of the ANN INC.
acquisition and the use of Non-GAAP financial measures.
For the first quarter of Fiscal 2016, the Company reported a net
loss of $0.10 per diluted share compared to net income of $0.32 per
diluted share in the same period of Fiscal 2015. The decrease was
primarily due to the effect of purchase accounting adjustments and
transaction costs related to the acquisition of ANN INC. which
closed during the first quarter of Fiscal 2016. Adjusted earnings
for the first quarter of Fiscal 2016 were $0.36 per diluted share
compared to $0.33 per diluted share in the first quarter of fiscal
2015.
David Jaffe, President and Chief Executive Officer of ascena
retail group, inc., commented, "On the operating front, we were
pleased with first quarter earnings, which exceeded our
expectations. We saw strong sales performance at maurices
and Lane Bryant, and significant gross margin rate recovery
at Justice, Ann Taylor and LOFT. We continue
to execute well against controllable factors, and believe we have
compelling product and the appropriate level and mix of inventory
to maximize our holiday opportunity."
Jaffe further commented, "Specific to the Black Friday / Cyber
Monday period, we saw mixed performance across our portfolio.
Importantly, we were very pleased with performance at
Justice, which significantly exceeded our expectations
during this critical peak period, delivering strong positive comp
performance despite a reduced level of promotional activity."
Jaffe concluded, "As we discussed in detail at our investor day
last month, the initial phase of our integration of ANN INC. is
progressing well, along with each of the synergy work-streams. We
are increasingly confident that the Justice turnaround is
gaining traction, and we're excited about the continuing
improvement of Lane Bryant fundamentals, along with the
sustained strength of maurices performance. While
dressbarn had another challenging quarter, we continue to
work to build the foundation for future growth."
About ascena retail group,
inc.
ascena retail group, inc. (NASDAQ: ASNA) is a leading
national specialty retailer offering clothing, shoes, and
accessories for missy and plus-size women under the Ann
Taylor, LOFT, Lou & Grey, Lane Bryant, Cacique, maurices,
dressbarn, and Catherines brands, and for
tween girls under the Justice brand. ascena retail
group, inc. operates, through its 100% owned subsidiaries,
ecommerce operations and approximately 5,000 stores throughout the
United States, Canada and Puerto Rico.
For more information about ascena retail group, visit
ascenaretail.com, AnnTaylor.com, LOFT.com, louandgrey.com,
lanebryant.com, cacique.com, maurices.com, dressbarn.com,
catherines.com, and shopjustice.com.
Fiscal First Quarter
Results
Net sales for the first quarter of Fiscal 2016 increased 40.0%
to $1.672 billion, compared to $1.194 billion for the first quarter
of last year. The increase was due to the ANN INC. acquisition.
Inclusive of ANN INC. for the full thirteen week period, adjusted
net sales were $1.794 billion versus $1.841 billion last year. For
the legacy ascena brands, on a consolidated basis, comparable sales
decreased 3%, to $1.077 billion from $1.116 billion for the first
quarter of last year; non-comparable sales increased 8%, to $48.3
million from $44.7 million; and wholesale, licensing and other
revenues increased 35%, to $45.4 million from $33.7 million.
The Company’s comparable sales data for the fiscal first quarter
is summarized below:
Net Sales
(millions) Comparable
Sales
First Quarter Ended October 24, 2015
October 25, 2014 ANN (a)
N/A $ 501.2 $ —
Justice (15)% 305.4 357.0
Lane Bryant 4% 256.2 245.7
maurices 7% 282.7 251.9
dressbarn (5)% 247.4 259.6
Catherines (1)% 79.1 80.0
(a) Information related to the ANN segment for the first
quarter of Fiscal 2016 is for the post-acquisition period from
August 22, 2015 to October 31, 2015.
Gross margin was $896.1 million, or 53.6% of sales for the first
quarter of Fiscal 2016, compared to $694.5 million, or 58.2% of
first quarter sales last year. The decrease in rate was mainly due
to the effect of the ANN INC. acquisition, which included an
unfavorable, non-cash purchase accounting adjustment of
approximately $104 million for the first quarter of Fiscal 2016
associated with the write-up of inventory to fair market value.
Inclusive of ANN INC. for the full thirteen week period and
excluding the inventory-related purchase accounting adjustment,
gross margin was $1.073 billion, or 59.8% of adjusted net sales
compared to $1.050 billion, or 57.0% of adjusted net sales last
year. The rate improvement was broad-based, with the largest
increase at Justice, which was up over 700 basis points.
Buying, distribution and occupancy (“BD&O”) expenses for the
first quarter of Fiscal 2016 were $296.4 million, or 17.7% of
sales, compared to $214.4 million, or 18.0% of first quarter sales
last year, with approximately $79 million of the increase resulting
from the ANN INC. acquisition. Inclusive of ANN INC. for the full
thirteen week period, adjusted BD&O expenses were $321.5
million, or 17.9% of adjusted net sales, compared to $320.4
million, or 17.4% of adjusted net sales last year. Expenses were up
less than 1% versus last year, with higher buying expense at
several brands mostly offset by reduced distribution expense, which
improved from 1.3% of adjusted sales in the year-ago period to
1.1%, reflecting legacy ascena supply chain synergies.
Selling, general and administrative (“SG&A”) expenses for
the first quarter of Fiscal 2016 were $486.7 million, or 29.1% of
sales, compared to $354.5 million, or 29.7% of first quarter sales
last year, with approximately $124 million of the increase
resulting from the ANN INC. acquisition. The remaining increase of
$8 million from our legacy ascena brands was primarily due to
higher marketing costs at Lane Bryant and general
administrative increases. Inclusive of ANN INC. for the full
thirteen week period, SG&A expenses were $526.6 million, or
29.4% of adjusted net sales, compared to $524.3 million, or 28.5%
of adjusted net sales last year as SG&A optimization savings at
ANN INC. mostly offset expense growth at the legacy ascena brands
as noted above.
The Company realized an operating loss for the first quarter of
Fiscal 2016 of $12.0 million, or 0.7% of first quarter sales
compared to operating income of $66.1 million, or 5.5% of first
quarter sales last year. The decrease in operating results
consisted of an operating loss of $48.1 million at ANN INC., which
included approximately $110 million of non-cash purchase accounting
adjustments, primarily due to the inventory-related purchase
accounting adjustment, and a $33.5 million increase in Acquisition
and integration expenses. Operating income at our legacy ascena
brands increased by $3.5 million primarily reflecting increased
results at maurices and Lane Bryant, offset in part
by a decrease at dressbarn. Inclusive of ANN INC. for the
full thirteen week period, operating income for the first quarter
of Fiscal 2016 was $142.5 million, or 7.9% of adjusted net sales
compared to $127.2 million, or 6.9% of adjusted net sales last
year.
The effective tax rate increased to 43.3% for the first quarter
of Fiscal 2016 from 17.1% last year, which was well below our
statutory rate primarily due to the approximately $13 million
income tax benefit related to the retirement agreement for a former
Justice executive which was recorded in the first quarter of
Fiscal 2015.
The Company incurred a net loss for the first quarter of Fiscal
2016 of $18.1 million compared to generating net income of $53.5
million last year. Inclusive of ANN INC. for the full thirteen week
period, adjusted net income for the first quarter of Fiscal 2016
was $71.2 million as compared to $63.9 million last year.
The Company reported a net loss for the first quarter of Fiscal
2016 of $0.10 per diluted share compared to earnings of $0.32 per
diluted share last year. On an adjusted basis, first quarter
earnings per diluted share were $0.36 versus $0.33 last year.
Fiscal First Quarter Balance Sheet
Highlights
The Company ended the first quarter of Fiscal 2016 with cash and
cash equivalents of $322.9 million and total debt of $1.887
billion, inclusive of the term loan and the revolving credit
facility. The Company ended Fiscal 2015 with $240.6 million of cash
and cash equivalents and $116 million of total borrowing under the
revolving credit facility.
Total inventory at cost was down 7% versus the year-ago period,
inclusive of ANN INC. in both periods. Adjusting for the impact of
purchase price accounting, total inventory at cost was down 8%
versus the year ago period.
Fiscal 2016 Guidance
As a result of conforming adjustments between historical ANN
INC. reporting and ascena reporting, certain expenses historically
classified by ANN INC. within cost of goods sold are now classified
as buying expenses for all periods presented to conform to ascena's
presentation for similar expenses. As a result, we now expect gross
margin rate to be in the range of 56.3% - 56.8% compared to our
previous outlook of 55.0% - 55.5%, with a corresponding offset
within other operating expenses. There is no change to our EBITDA
outlook as a result of this conforming adjustment and there is no
change to our full year earnings per share outlook, which remains
in the range of $0.75 to $0.80.
While our first quarter earnings performance exceeded our
expectations, we are maintaining our view for the Fall season, and
we continue to expect approximately equal earnings contributions
from the Fall and Spring seasons.
Conference Call
Information
The Company will conduct a conference call today, December 1,
2015, at 4:30 PM Eastern Time to review its first quarter Fiscal
2016 results, followed by a question and answer session. Parties
interested in participating in this call should dial in at (877)
930-8316 prior to the start time, the conference ID is 81195088.
The call will also be simultaneously broadcast at www.ascenaretail.com. A recording of the call will
be available shortly after its conclusion and until December 8,
2015 by dialing (855) 859-2056, the conference ID is 81195088, and
until January 1, 2016 via the Company’s website at www.ascenaretail.com.
Non-GAAP Financial
Results
The Company's financial results for its fiscal first quarters
ended October 24, 2015 and October 25, 2014 reflect certain costs
related to the acquisition and integration of ANN INC., non-cash
inventory expense and non-cash depreciation and amortization
expense associated with the purchase accounting adjustments of ANN
INC.'s assets and liabilities to fair market value, and other
income and expenses classified outside of operating income.
Management believes that all such expenses are not indicative of
the Company’s underlying operating performance. As such, adjusted
results for Fiscal 2016 and Fiscal 2015, which exclude the effect
of such expenses, have been presented to supplement the reported
results. Reference should be made to Note 2 of the unaudited
condensed consolidated financial information included herein for a
reconciliation of adjusted, non-GAAP financial measures to the most
directly comparable GAAP financial measures.
In addition, Fiscal 2016 adjusted results reflect the legacy
ascena brand results combined to include ANN INC.'s results for a
full 13-week period, inclusive of the three-week stub period
preceding the close of the transaction on August 21, 2015. For
comparative purposes, Fiscal 2015 adjusted results reflect the
legacy ascena brands results combined to include ANN INC., as
adjusted for certain non-recurring expenses previously reported by
ANN INC. Reference should be made to Note 3 to the unaudited
condensed consolidated financial information included herein for
supplemental reconciliations of GAAP results to the adjusted
results presented herein for both the three months ended October
24, 2015 and the three months ended October 25, 2014.
Forward-Looking
Statements
Certain statements made within this press release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to certain risks and uncertainties that
could cause actual results to differ materially. The Company does
not undertake to publicly update or review its forward-looking
statements even if experience or future changes make it clear that
our projected results expressed or implied will not be achieved.
Detailed information concerning a number of factors that could
cause actual results to differ materially from the information
contained herein is readily available in the Company’s most recent
Annual Report on Form 10-K.
ascena retail group, inc. Condensed Consolidated
Statements of Operations (unaudited) (millions, except per
share data) Three Months
Ended
October 24,2015
% of NetSales
October 25,2014
% of NetSales
Net sales $ 1,672.0 100.0 % $ 1,194.2 100.0 % Cost of goods
sold (775.9 ) (46.4 )% (499.7 ) (41.8 )%
Gross margin 896.1
53.6 % 694.5 58.2 %
Other operating expenses: Buying,
distribution and occupancy expenses (296.4 ) (17.7 )% (214.4 )
(18.0 )% Selling, general and administrative expenses (486.7 )
(29.1 )% (354.5 ) (29.7 )% Acquisition and integration expenses
(42.5 ) (2.5 )% (9.0 ) (0.8 )% Depreciation and amortization
expense (82.5 ) (4.9 )% (50.5 ) (4.2 )%
Operating (loss)
income (12.0 ) (0.7 )% 66.1 5.5 % Interest expense (20.5 ) (1.2
)% (1.7 ) (0.1 )% Interest and other income, net 0.6 — % 0.1
— %
(Loss) income before provision for income taxes
(31.9 ) (1.9 )% 64.5 5.4 % Benefit (provision) for income taxes
13.8 0.8 % (11.0 ) (0.9 )%
Net (loss) income $ (18.1
) (1.1 )% $ 53.5 4.5 %
Net (loss) income per
common share: Basic $ (0.10 ) $ 0.33 Diluted $ (0.10 ) $
0.32
Weighted average common shares
outstanding: Basic 184.8 162.0 Diluted 184.8
164.8
See accompanying notes.
ascena retail group, inc. Condensed Consolidated
Balance Sheets (Unaudited) (millions)
October 24,2015
July 25,2015
ASSETS Current assets: Cash and cash equivalents $
322.9 $ 240.6 Inventories 889.2 489.3 Deferred tax assets 68.2 88.5
Prepaid expenses and other current assets 253.8 131.5
Total current assets 1,534.1 949.9 Property and equipment,
net 1,619.3 1,170.0 Goodwill 1,272.9 319.7 Other intangible assets,
net 1,297.1 388.3 Other assets 82.1 78.3
Total assets
$ 5,805.5 $ 2,906.2
LIABILITIES AND EQUITY
Current liabilities: Accounts payable $ 417.4 $ 238.8
Accrued expenses and other current liabilities 476.3 403.2 Deferred
income 104.7 64.1 Income taxes payable 7.7 11.6 Current portion of
long term debt 13.5 —
Total current liabilities
1,019.6 717.7 Long-term debt, less current portion 1,793.0 106.5
Lease-related liabilities 418.1 241.4 Deferred income taxes 539.8
181.8 Other non-current liabilities 173.7 140.7
Total
liabilities 3,944.2 1,388.1
Equity 1,861.3
1,518.1
Total liabilities and equity $ 5,805.5 $
2,906.2
See accompanying notes.
ascena retail group, inc. Segment Information
(Unaudited) (millions)
Three Months Ended
October 24,2015
October 25,2014
Net sales:
ANN (a) $ 501.2 $ —
Justice 305.4
357.0
Lane Bryant 256.2 245.7
maurices 282.7 251.9
dressbarn 247.4 259.6
Catherines 79.1 80.0
Total net sales $ 1,672.0 $ 1,194.2
Three Months Ended
October 24,2015
October 25,2014
Operating (loss) income:
ANN (a) (b) $ (48.1 ) $ —
Justice 40.2 40.8
Lane Bryant (1.4 ) (8.6 )
maurices 39.7 26.9
dressbarn (4.7 ) 8.1
Catherines 4.8 7.9 Unallocated acquisition and integration
expenses (42.5 ) (9.0 ) Total operating (loss) income $ (12.0 ) $
66.1
Three Months Ended
October 24,2015
October 25,2014
Adjusted EBITDA:
ANN (a) $ 83.8 $ —
Justice
57.2 55.6
Lane Bryant 9.1 3.0
maurices 51.3 37.5
dressbarn 8.7 19.9
Catherines 7.1 9.6
Total Adjusted EBITDA $ 217.2 $ 125.6 (a)
Information herein related to the ANN segment for the first quarter
of Fiscal 2016 is for the post-acquisition period from August 22,
2015 to October 31, 2015. (b) Information herein related to
the ANN segment includes the impact of inventory expense as well as
depreciation and amortization expense associated with the purchase
accounting adjustments of ANN's assets and liabilities to fair
market value as discussed in Note 2 to the Unaudited Condensed
Consolidated Financial Information.
ascena retail group, inc.Notes to Unaudited Condensed
Consolidated Financial Information
Note 1. Acquisition of ANN INC.
On August 21, 2015, the Company acquired 100% of the outstanding
common stock of ANN INC. ("ANN") for an aggregate purchase
price of approximately $2.1 billion (the "ANN Acquisition"). The
ANN segment utilizes a 52-53 week fiscal year following the
National Retail Federation calendar. Accordingly, ANN's
results have been included herein for the post-acquisition period
from August 22, 2015 to October 31, 2015. The effect of the
one-week reporting period difference is not material to the
condensed consolidated financial statements for the three months
ended October 24, 2015.
Note 2. Use of Non-GAAP Financial Measures
To provide investors information to assist them in assessing the
Company’s ongoing operations on a comparable basis, the Company has
provided financial measures in this press release that reflect (i)
certain acquisition and integration expenses, (ii) non-cash
inventory expense and non-cash depreciation and amortization
expense associated with the purchase accounting adjustments of
ANN's assets and liabilities to fair market value, and (iii)
other income and expenses classified outside of operating income.
Management believes that all such costs are not indicative of the
Company’s underlying operating performance.
Throughout this release, the term “reported” refers to
information prepared in accordance with accounting principles
generally accepted in the United States (GAAP), while the terms
“adjusted” and "combined" refers to non-GAAP financial information
adjusted to exclude certain non-recurring costs and include results
of ANN INC. for periods prior to August 21, 2015, which is
discussed more fully in Note 3 below.
In addition, we present herein the financial performance measure
of earnings before interest, taxes, depreciation and amortization,
as adjusted ("Adjusted EBITDA") to exclude non-operating related
items such as (i) costs related to acquisitions and integration,
(ii) non-cash inventory expense and depreciation and amortization
expenses associated with the purchase accounting adjustments of
ANN's assets and liabilities to fair market value, and (iii)
other income and expenses classified outside of operating income.
These measures may not be directly comparable to similar measures
used by other companies and should not be considered a substitute
for performance measures in accordance with GAAP such as operating
income and net income reported herein. The table below reconciles
Adjusted EBITDA to Net (loss) income as reflected in our unaudited
condensed consolidated statements of operations. For a more
detailed discussion on our use of Adjusted EBITDA, reference is
made to our Quarterly Report on Form 10-Q for the Fiscal Quarter
Ended October 24, 2015, which also has been filed with the US
Securities and Exchange Commission.
ascena retail group, inc.Notes to Unaudited Condensed
Consolidated Financial Information - (continued)(millions,
except per share data)
Note 2. Use of Non-GAAP Financial Measures
(continued)
Reconciliation of Reported Basis to
Adjusted Basis Three Months Ended Three
Months Ended October 24, 2015 October 25,
2014
(Loss)incomebeforeincometaxes
Benefit(provision)for
incometaxes
Net(loss)income
Diluted net(loss)income
percommonshare
(Loss)incomebeforeincometaxes
Benefit(provision)for
incometaxes
Net(loss)income
Dilutednet(loss)incomepercommonshare
Reported basis – continuing operations $ (31.9 ) $ 13.8 $ (18.1 ) $
(0.10 ) $ 64.5 $ (11.0 ) $ 53.5 $ 0.32 Adjustments: Impact
of non-cash purchase accounting adjustments 110.7 (43.7 ) 67.0 0.36
— — — — ANN pre-acquisition results (see Note 3 below) 1.3 (0.5 )
0.8 — 52.0 (19.0 ) 33.0 0.20 Acquisition and integration expenses
42.5 (16.9 ) 25.6 0.14 9.0 (3.4 ) 5.6 0.04 Discrete tax item (a) —
— — — — (13.4 ) (13.4 ) (0.08 )
Accelerated depreciation
associated with the
Company’s supply chain
and technological
integration efforts and
the closure of Brothers
— — — — 0.5 (0.2 ) 0.3 0.00 Impact of ANN Acquisition on debt (b)
(6.8 ) 2.7 (4.1 ) (0.02 ) (24.9 ) 9.8 (15.1 ) (0.09 ) Impact of ANN
Acquisition on EPS (c) — — — (0.02 ) —
— — (0.06 ) Adjusted basis – continuing
operations $ 115.8 $ (44.6 ) $ 71.2 $ 0.36
$ 101.1 $ (37.2 ) $ 63.9 $ 0.33
(a) Represents a tax benefit which was treated as a discrete item
within the first quarter of Fiscal 2015 when a non-deductible
permanent item associated with previously accrued deferred
compensation became fully deductible in the first quarter of Fiscal
2015 and was a significant factor in reducing the Company's
effective income tax rate during that period. (b) Reflects
incremental interest expense on the $1.8 billion term loan used to
fund the cash portion of the purchase price of the ANN Acquisition.
(c) Reflects the impact on EPS of using 196.0 million
weighted average common shares for adjusted diluted net income per
common share compared to the amount used to calculate EPS on an
as-reported basis in both periods. The weighted average number of
common shares reflects the impact of the additional shares issued
in the ANN Acquisition as outstanding for the entire period as if
the acquisition had occurred as of the beginning of the period
presented as well as the dilutive effect of stock options and other
securities.
ascena retail group, inc. Notes
to Unaudited Condensed Consolidated Financial Information -
(continued) (millions) Note 2. Use of Non-GAAP
Financial Measures - (continued) Reconciliation of
Adjusted EBITDA to Net (loss) income
Three Months Ended October 24, 2015
October 25, 2014 (millions) Adjusted
EBITDA (a) $ 217.2 $ 125.6 Acquisition and integration
expenses (42.5 ) (9.0 ) Non-cash inventory expense associated with
the write-up of
ANN's inventory to fair market value (104.2
) — Depreciation and amortization expense (82.5 ) (50.5 )
Operating (loss) income (12.0 ) 66.1 Interest expense
(20.5 ) (1.7 ) Interest and other income, net 0.6 0.1
(Loss) income before provision for income taxes (31.9 ) 64.5
Benefit (provision) for income taxes 13.8 (11.0 )
Net
(loss) income $ (18.1 ) $ 53.5 (a) Information
for the three months ended October 24, 2015 includes results for
the ANN segment for the post-acquisition period from August 22,
2015 to October 31, 2015. No results for the ANN segment are
included herein for the three months ended October 25, 2014.
ascena retail group, inc.Notes to Unaudited Condensed
Consolidated Financial Information -
(continued)(millions)
Note 3. Supplemental Information
The following information is provided to enhance the user’s
overall understanding of the Company’s current financial
performance and has been prepared based upon currently available
information and assumptions deemed appropriate by our management.
This financial information is not necessarily indicative of what
our results of operations actually would have been had the ANN
Acquisition been completed as of July 27, 2014, the beginning of
the earliest period presented. In addition, the financial
information is not indicative of future results or current
financial conditions and does not reflect any anticipated
synergies, operating efficiencies, cost savings or any integration
costs that may result from the ANN Acquisition. This financial
information should be read in conjunction with separate historical
financial statements and accompanying notes filed with the U.S.
Securities and Exchange Commission.
Specifically, we have shown the Company's historical reported
results combined to include ANN's financial information for
the periods prior to the acquisition date of August 21, 2015. We
believe this presentation provides useful information to enhance
comparability between our three months ended October 24, 2015
and our three months ended October 25, 2014. Fiscal 2016
adjusted results reflect the legacy ascena brand results combined
to include ANN results for a full 13-week period, inclusive
of the three-week stub period preceding the close of the
transaction on August 21, 2015. For comparative purposes, Fiscal
2015 adjusted results reflect the results of the legacy ascena
brands combined to include ANN, as adjusted for certain
non-recurring expenses previously reported by ANN.
The financial information in the table below has also been
adjusted to exclude non-operating related items such as (i) costs
related to acquisitions and integration and (ii) non-cash inventory
expense and other adjustments associated with the purchase
accounting adjustments of ANN's assets and liabilities to
fair market value. The non-GAAP financial information should be
considered in addition to, not as a substitute for or as being
superior to, operating income, cash flows, or other measures of
financial performance prepared in accordance with GAAP.
ascena retail group, inc.Notes to Unaudited Condensed
Consolidated Financial Information - (continued)(millions,
except per share data)
Note 3. Supplemental Information (continued)
Three Months Ended October 24, 2015
ascenaasreported
Acquisitionandintegrationexpenses
ANNAcquisitionpurchasepriceadjustments
Results ofANN priorto
August21, 2015 (a)
Impact ofacquisitionon
debt (b)
Impact ofacquisitionon
EPS (c)
ascena asadjusted
Net sales $ 1,672.0 $ — $
— $ 122.0 $ —
$ — $ 1,794.0 Cost
of goods sold 775.9 —
(104.2 ) 49.8 —
— 721.5
Gross
margin 896.1 — 104.2 72.2 — — 1,072.5 Buying, distribution and
occupancy expenses 296.4 — — 25.1 — — 321.5 Selling, general and
administrative expenses 486.7 — — 39.9 — — 526.6 Acquisition and
integration expenses 42.5 (42.5 ) — — — — — Depreciation and
amortization expense 82.5 —
(6.5 ) 5.9 —
— 81.9
Operating (loss) income (12.0 ) 42.5 110.7 1.3 — — 142.5
Interest expense (20.5 ) — — — (6.8 ) — (27.3 ) Interest and other
income, net 0.6 — —
— —
— 0.6
(Loss) income before
provision for income taxes (31.9 ) 42.5 110.7 1.3 (6.8 ) —
115.8 Benefit (provision) for income taxes 13.8
(16.9 ) (43.7 ) (0.5 )
2.7 — (44.6
)
Net (loss) income $ (18.1 ) $
25.6 $ 67.0 $
0.8 $ (4.1 ) $
— $ 71.2
Diluted EPS $ (0.10 ) $ 0.14 $ 0.36 $ — $ (0.02 ) $ (0.02 )
$ 0.36
Adjusted EBITDA $ 70.5 $ 42.5 $ 104.2 $ 7.2 $ — $ — $
224.4 (a) Represents ANN's results for the three week stub
period from the end of their previous fiscal quarter through the
acquisition date as prepared by ANN INC. and have been adjusted to
exclude non-recurring transaction-related expenses incurred by ANN
resulting from the ANN Acquisition. (b) Represents the
impact of incremental interest expense on the $1.8 billion term
loan used to fund the cash portion of the purchase price of the ANN
Acquisition for the period prior to the acquisition date.
(c) Reflects the impact on EPS of using 196.0 million weighted
average common shares for adjusted diluted net income per common
share compared to the 184.8 million used to calculate EPS on an
as-reported basis. The weighted average number of common shares
reflects the impact of the additional shares issued in the ANN
Acquisition as outstanding for the entire period as if the
acquisition had occurred as of the beginning of the period
presented as well as the dilutive effect of stock options and other
securities.
ascena retail group, inc. Notes
to Unaudited Condensed Consolidated Financial Information -
(continued) (millions, except per share data)
Note 3. Supplemental Information (continued)
Three Months Ended October 25, 2014
ascenaasreported
Acquisitionandintegrationexpenses
Accelerateddepreciation
Discretetax item
Results ofANN
asadjusted (a)
Impact ofacquisitionon
debt (b)
Impact ofacquisition on
EPS (c)
ascenaasadjusted
Net sales $ 1,194.2 $ — $ —
$ — $ 646.8 $ — $
— $ 1,841.0 Cost of goods sold 499.7
— —
— 291.1
— —
790.8
Gross margin 694.5 — — —
355.7 — — 1,050.2 Buying, distribution and occupancy expenses 214.4
— — — 106.0 — — 320.4 Selling, general and administrative expenses
354.5 — — — 169.8 — — 524.3 Acquisition and integration expenses
9.0 (9.0 ) — — — — — — Depreciation and amortization expense 50.5
— (0.5
) — 28.3
— —
78.3
Operating income 66.1 9.0
0.5 — 51.6 — — 127.2 Interest expense (1.7 ) — — — (0.3 ) (24.9 ) —
(26.9 ) Interest and other income, net 0.1
— —
— 0.7 —
— 0.8
Income (loss) before provision for income
taxes 64.5 9.0 0.5 — 52.0 (24.9 ) — 101.1 (Provision) benefit
for income taxes (11.0 ) (3.4 )
(0.2 ) (13.4 )
(19.0 ) 9.8 —
(37.2 )
Net income (loss)
$ 53.5 $ 5.6
$ 0.3 $
(13.4 ) $ 33.0
$ (15.1 ) $ —
$ 63.9
Diluted
EPS $ 0.32 $ 0.04 $ — $ (0.08 ) $ 0.20 $ (0.09 ) $ (0.06 ) $
0.33
Adjusted EBITDA $ 116.6 $ 9.0 $ — $ — $ 79.9 $ — $ — $
205.5 (a) Refer to the table below for ANN's results for the
period ending November 1, 2014. (b) Represents the impact of
interest expense incurred on the $1.8 billion term loan used to
fund the cash portion of the purchase price of the ANN Acquisition.
(c) Reflects the impact on EPS of using 196.0 million
weighted average common shares for adjusted diluted net income per
common share compared to 164.8 million shares used to calculate EPS
on an as-reported basis. The weighted average number of common
shares reflects the impact of the additional shares issued in the
ANN Acquisition as outstanding for the entire period as if the
acquisition had occurred as of the beginning of the period
presented as well as the dilutive effect of stock options and other
securities.
ascena retail group, inc. Notes
to Unaudited Condensed Consolidated Financial Information -
(continued) (millions) Note 3. Supplemental
Information (continued) Three
Months Ended November 1, 2014
ANN asreported
Conformingadjustments
(a)
ANNadjustment (b)
ANN asadjusted
Net sales $ 646.8 $ — $ — $ 646.8 Cost of goods sold 306.9
(15.8 ) — 291.1
Gross margin 339.9 15.8
— 355.7 Buying, distribution and occupancy expenses — 110.9 (4.9 )
106.0 Selling, general and administrative expenses 293.2 (123.4 ) —
169.8 Depreciation and amortization expense — 28.3 —
28.3
Operating income 46.7 — 4.9 51.6 Interest
and other income, net 0.5 (0.8 ) — (0.3 ) Other non-operating
expense, net (0.1 ) 0.8 — 0.7
Income before
provision for income taxes 47.1 — 4.9 52.0 Provision for income
taxes (17.2 ) — (1.8 ) (19.0 )
Net income $ 29.9
$ — $ 3.1 $ 33.0 (a) Reflects
certain accounting classification conforming adjustments to align
ANN's historical presentation to ascena's presentation. (b)
Represents costs incurred by ANN related to the early lease
termination and related closure of Ann Taylor's Madison Avenue
store in New York City that were previously reported as adjustments
to GAAP earnings by ANN for its quarter ended November 1, 2014.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151201006743/en/
ascena retail group, inc.Investor Relations, 551-777-6895orICR,
Inc.James Palczynski, 203-682-8229Partnerjp@icrinc.com
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