Ascena Retail Group (ASNA) has remodeled Dress Barn stores, rationalized store base and improved operation efficiency, quality and fashion to respond to consumer apathy to the brand, while maintaining impressive sales at its Justice division for tweens and its Maurices for female young adults, says Marshall Kaplan, Managing Director at Global Investment Solutions.
“ASNA has gone from five distribution centers down to two. Management moved Dress Barn’s distribution center into a state-of-the-art Justice distribution facility in Ohio and developed a new merchandise planning and allocation system as well. ASNA is also adopting a company-wide sourcing model that should improve efficiencies,” Kaplan said.
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Kaplan says ASNA recently acquired two newer divisions as a result of the Charming Shoppes transaction — Lane Bryant and Catherines, both of which target plus-size women. He says management is pursuing synergy opportunities, and also cost savings.
“From a valuation perspective, the stock trades at approximately 13 times forecast earnings for fiscal 2014 — July. Sentiment is not positive right now in the investment community. Of the 11 recommendations by analysts on Wall Street, currently, seven of them are ‘hold’ rated. We believe that the market has not fully taken note of management’s numerous initiatives to improve the company,” Kaplan said.
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