Financial Report Presentation
Transcript: Chico's FAS, L Brands, Ascena Retail Group Financial Report Analysis This is the lowest quarterly gross income in recent 3 years. The net income is at normal level. Ascena Retail Group Noticeable Points The boost in revenue is due to an acquisition of ANN Inc. at the end of 2015, which increase sales by $575.1 million. If we adjust the effect of acquisition, the revenue would decrease by 4.4%, and net income would decrease by 11.56%. Noticeable Points Public Traded Company Soma only count for 13% of total sales of Chico's FAS Inc., but the number is increasing. New CEO&President Ms. Broader is on board. The company announced an expansion of restructuring program to further align the organizational structure with long-term growth initiatives. The program expected to generate $65 - $85 million saving. Company focused on increasing the sales volume and profitability of their existing brands through their four focus areas: (1) evolving the customer experience, (2) strengthening their brands' positions, (3) leveraging actionable retail science, and (4) sharpening their financial principles. Company pursue the growth of the brands in their portfolio by building their omni-channel capabilities, which includes managing their store base and their growing online presence, executing marketing plans, effectively leveraging expenses and optimizing the potential of each of their three brands (Chico's, WHBM, Soma). Q1 Report reveal some issues. Chico's sales decrease 5.4% compare to last year; WHBM's sales decrease 3.8%; Soma has a 0.5% increase compare to last year, yet this number was 6.5% in 2015 Q1. In first quarter, 4 Chico's and 1 WHBM stores closed and expect to close another 20 Chico's and 10 WHBM stores in 2016. Soma, on the other hand, has open 4 new stores and plan to open another 5 stores this year. Chico's FAS Victoria’s Secret count for 66.6% of the total sales and it has 3.4% growth in sales in Q1, 2016 compare to 2015. However, its operating income decrease from $289 to $235 millions, a 18.7% drop. THANK YOU Large net sales increase for PINK and sport (Victoria's Secret), driven by a compelling merchandise assortment that incorporated newness, innovation and fashion. The gross profit rate decrease was driven primarily by an increase in promotional activity, the expenses related to the restructuring activities, increased shipping offers and the negative impacts of foreign currency at Victoria's Secret Canada. The company decreased its guidance for 2016 full-year adjusted earnings per share to $3.60 to $3.80 from $3.90 to $4.10 previously, and issued guidance for second quarter earnings per share between $0.50 and $0.60 , which is lower than previously $0.60 to $0.70. The company indicate that this year's performance will be worse than 2015. During the first quarter of 2016, the company announced strategic actions within the Victoria’s Secret segment designed to focus the brand on its core merchandise categories and streamline operations. The Company announced it will place more focus on brand building and loyalty-enhancing marketing and advertising rather than using traditional catalogues and offers. As a result of these actions, the company recorded charges related to cancellations of fabric commitments for non go-forward merchandise and a reserve against paper that was previously intended for future catalogues. L Brands Noticeable Points Lane Bryant has a net sales of $273.9 million in Q1, 2016. This is about 16.4% of the total sales. If we exclude the influence of acquisition, the number would be 25%, which is same as Q1, 2015. Company expect the acquisition of ANN Inc. will bring about $85 million cost saving and $150 million synergy gain at the end of FY 2018. However, the acquisition also bring the company $948.2 million goodwill, which quadruple the company's goodwill. The downside effect for amortization is high. Currently company only have one distribution center (DC) at Etna and two ports of entry (East and West). Company plan to build a new DC at West Coast and expect a much stronger retail DC network. Company expect significant accretion at all brands (400 bp, compare to 2013), driven by design and product development, internal sourcing, inventory management and promotion reduction. Lane Bryant operating results improved by $15.1 million mainly as a result of increases in sales and improved gross margin rate related to an increased mix of full-ticket selling and tighter inventory management.
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