ascena retail group Provides Additional Business Update on COVID-19
The Company closed all of its stores on
In early May, the Company began to re-open a select number of stores in states that have lifted business restrictions on non-essential businesses. The Company’s approach to meeting customer demand and re-opening its stores has been to use its stores to fulfill e-commerce orders from its existing store inventory. Additionally, the Company has also begun to re-introduce its buy online and pick-up in stores option via curbside pickup. Lastly, some stores have begun to fully re-open to customers following local health and safety guidelines and regulations, which include the following:
- Limiting the number of customers in the stores;
- Implementing health safety checks for associates before every shift;
- Providing hand sanitizer and masks to customers;
- Creating new flexible distance between clothing racks;
- Adjusting fitting rooms to accommodate social distancing practices;
- Installing plexiglass health guard partitions at checkout areas; and
- Following enhanced cleaning protocols.
In markets where shelter-in-place orders have been lifted, and where the Company has fully opened stores, the Company is experiencing significantly reduced customer traffic relative to the same period last year.
Inventory at the end of the quarter was down approximately 20% compared the same period in the prior year. This reflects a significant increase in inventory reserves, reflecting the uncertainty of consumer sentiment once stores fully re-open. Gross inventory, before reserves, was up 5% compared to the same period in the prior year.
The Company has taken a number of steps since the temporary closure of its stores to maintain maximum financial flexibility. Those steps include the following:
$230 millionunder its amended and restated revolving credit agreement, as previously announced in March;
- Cancelled merchandise receipts where possible in order to better align inventory receipts with expected market demand;
- Extended landlord and vendor payment terms, including withholding payments in certain instances;
- Furloughed over 90% of our associates;
- Significantly reduced base salaries for associates earning above a certain level;
- Amended and restated the Company’s Executive Severance Plan to better align with prevailing market practices;
- Reduced advertising expenses; and
- Reduced capital expenditures to those that are considered business critical.
As a result of these steps, the Company ended the third quarter with cash and cash equivalents of approximately
The Company ended the third quarter with outstanding term-loan debt of
Due to the Company’s increased level of debt and deferred liabilities resulting from the COVID-19 pandemic, despite the aggressive steps outlined above, the Company will continue to evaluate all available options to preserve its ongoing operations.
The Company also announced today that it will file its Quarterly Report on Form 10-Q for the quarter ended
Certain statements or information 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. Forward-looking statements are statements related to future, not past, events, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “estimate,” “forecast,” “target,” “preliminary,” or “range,” or similar words including, without limitation the impact of the COVID-19 pandemic on the Company’s business. 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 and subsequent filings with the
About ascena retail group, inc.
ascena retail group, inc.