Ascena Retail Group Inc. (NASDAQ:ASNA) Q2 2016 Earnings Conference Call - Final Transcript

Mar 01, 2016 • 04:30 pm ET

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Ascena Retail Group Inc. (NASDAQ:ASNA) Q2 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Ascena Retail Group Q2 2016 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference is being recorded.

I'd like to introduce your host for today's conference, Alison Kane of ICR. Ma'am, please begin.

Executive
Allison Kane

Thank you, Operator. We would like to remind participants that remarks made by management during the course of this call may contain forward-looking statements about the company's results and plans. These are subject to risks and uncertainties that could cause the actual results and implementation of the company's plan to vary materially. Detailed information concerning those risks and uncertainties are readily available in our most recently reported annual report on Form 10-K which was filed at the US Securities and Exchange Commission in September.

In addition, to provide investors information to assist them in assessing the company's ongoing operations on a comparable basis, the company will refer to non-GAAP financial measures such as adjusted earnings and EBITDA. These measures adjust for the impact of certain costs that the company does not believe is indicative of its underlying operating performance. These non-GAAP measures should not be considered a substitute for information prepared in accordance with accounting principles generally accepted in the United States such as operating income and net income.

A reconciliation of the non-GAAP measures to GAAP measures we discuss today are included in our earnings release, a copy of which has been filed with the US Securities and Exchange Commission and the current report on Form 8-K. All references to EBITDA on today's call are in fact to adjusted EBITDA as more fully discussed in our earnings release and our quarterly report on Form 10-Q for the fiscal quarter ended January 23, 2016, which will be filed at the US Securities and Exchange Commission later today. For a reconciliation of results presented today to the most directly comparable GAAP measures, please refer to the press release issued earlier today.

And with that, I will hand the call over to David Jaffe, President and CEO of Ascena Retail Group. David?

Executive
David R. Jaffe

Good afternoon and thank you for joining us to discuss our fiscal second quarter 2016 results. With me today is our CFO, Robb Giammatteo. Our second quarter earnings performance came in just above the pre-announced range we shared in mid-January, due mainly to strengthening performance at LOFT and margin rate favorability at Justice.

Operating income growth for the quarter was driven primarily by ANN INC., and integration activity continues to progress well. We are pleased with the continuing Justice turnaround and remain confident in our full year plan. Maurices delivered another solid quarter, and we continue to see improvement at Lane Bryant.

Consistent with expectations, we are continuing to drive improvement in gross margin rate relative to last year through disciplined inventory management, strong product assortments that are resonating with our customers and an effective