• Comparable sales declined 2%;
• Operating loss was $140 million, which primarily reflects non-cash impairment charges of goodwill and other intangible assets, offset in part by the benefit of cost reductions; adjusted operating loss was $31 million, excluding the non-cash impairment charges and restructuring costs as detailed in Note 2;
  
• Loss per share from continuing operations was $13.22 and adjusted loss per share from continuing operations was $4.95, both of which reflect the 1-for-20 reverse stock split which became effective during the second quarter;
  
• Dressbarn wind down is now complete;
  
• Improved inventory levels, down 5% versus the prior year;
  
• Repurchased $80 million of term loan debt in open market transactions for $49 million; and
  
• Cash and revolver availability of over $600 million.

Gary Muto, Chief Executive Officer of ascena commented, "For the second quarter, we are pleased to have exceeded our adjusted operating income expectations for the third consecutive quarter, resulting from better gross margin performance and continued cost reduction efforts. We continue to work toward delivering sustainable growth by leveraging our customer analytics and insights, placing the customer at the center of everything we do. We are confident that the work we are doing now sets us up to provide consistent profitable performance and enhance shareholder value over the longer term."

Carrie Teffner, Interim Executive Chair of ascena commented, "During the second quarter we made solid progress on our commitment to simplify the business and focus on fewer and more meaningful initiatives. With respect to our portfolio review, we have made great progress.  In addition to the sale of our majority interest in maurices, we successfully completed the wind down of the Dressbarn business in February.  As it pertains to our previously discussed brand review, we currently have no active conversations.  As such, we are proceeding with a clear focus on our Premium, Plus and Kids segments by driving brand strategies which ensure long-term relevance and differentiation, while streamlining our back-end functionality to improve efficiency and profitability.  Our Board and management team remain committed to taking proactive steps to position ascena for long-term success and will continue to evaluate opportunities that create shareholder value."

Overview
Current and prior year results include items that the Company does not believe reflect the fundamental performance of its business.  More information on such items is provided in the Notes to the unaudited condensed consolidated financial information, which is included on pages 10 through 12.  In addition, the following commentary reflects results from the Company's continuing operations which exclude its Dressbarn and maurices brands.  The wind down of Dressbarn was completed during the second quarter of Fiscal 2020 and our majority interest in maurices was sold in Fiscal 2019.

Gross margin
Gross margin decreased to $635 million from $660 million, driven by the net sales decline, partially offset by the gross margin rate improvement to 52.2% of sales, for the second quarter of Fiscal 2020, compared to 51.9% of sales in the year-ago period. The increase in gross margin rate from the second quarter last year was primarily due to increased margins at our Premium Fashion and Plus Fashion segments, reflecting decreased promotional activity.  Those increases were partially offset by higher promotional activity at our Kids Fashion segment to clear excess inventory.

Buying, distribution, and occupancy expenses
Buying, distribution, and occupancy ("BD&O") expenses for the second quarter of Fiscal 2020 decreased 10% to $220 million, which represented 18.1% of sales, compared to $245 million, or 19.3% of sales in the year-ago period.  In terms of dollars, the reduction in expenses was driven by lower occupancy expenses and lower employee-related costs, both resulting primarily from our continued cost reduction efforts, as well as amounts received under the transition services agreement with maurices.

Selling, general, and administrative expenses
Selling, general, and administrative ("SG&A") expenses for the second quarter of Fiscal 2020 decreased 3% to $382 million, or 31.4% of sales, compared to $394 million, or 31.0% of sales in the year-ago period.  The decrease in SG&A expenses was primarily due to our cost reduction initiatives, mainly reflecting lower store-related expenses, lower headcount as well as non-merchandise procurement savings.  SG&A expenses were also lower due to amounts received under the transition services agreement with maurices.

Debt
The Company ended the second quarter of Fiscal 2020 with total debt of $1,292 million, which represents the balance remaining on the term loan.  The reduction from the $1,372 million outstanding as of the end of the fourth quarter of Fiscal 2019 reflects the open market repurchases made during the second quarter of Fiscal 2020 whereby the Company repurchased approximately $80 million of aggregate principal for a total purchase price of approximately $49 million.  Additionally, subsequent to the second quarter of Fiscal 2020, the Company completed an additional repurchase of approximately $42 million of aggregate principal for a total purchase price of approximately $29 million.

The Company will conduct a conference call today, March 9, 2020, at 4:30 PM Eastern Time to review its second quarter Fiscal 2020 results, followed by a question and answer session. Parties interested in participating in this call should dial in at (877) 407-3982 prior to the start time, the conference ID is 13699557. 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 March 23, 2020 by dialing (844) 512-2921, the conference ID is 13699557, and until April 9, 2020 via the Company's website at www.ascenaretail.com.

As noted above, the comparability of the Company's operational results for the periods presented herein has been affected by certain transactions. The Company believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating current period performance, trends and period-over-period comparative results.  Non-GAAP measures eliminate amounts that do not reflect the fundamental performance of the Company's businesses. These items include costs such as (i) restructuring, tangible asset impairments and other related charges including, but not limited to, charges incurred under the Company's cost reduction initiatives, and (ii) impairments of goodwill and other intangible assets. Reference is made to Notes 1 and 2 of the unaudited condensed consolidated financial information included herein for more information and a complete listing of such adjustments.

Many investors also use non-GAAP measures as a common basis for comparing the performance of different companies.  A general limitation of non-GAAP measures is that they are not prepared in accordance with U.S. generally accepted accounting principles and may not be comparable to similarly titled measures of other companies due to differences in methods of calculation and excluded items. Non-GAAP measures should be considered in addition to, not as a substitute for, the Company's Operating income and Net income per common share, as well as other measures of financial performance and liquidity reported in accordance with U.S. generally accepted accounting principles.

Additionally, a reconciliation of the projected non-GAAP operating income, which is a forward-looking non-GAAP financial measure, to operating income, the most directly comparable GAAP financial measure, is not provided because the Company is unable to provide such reconciliation without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. These GAAP measures may include the impact of such items as restructuring charges, tangible asset impairments and impairments of goodwill and other intangible assets, and the tax effect of all such items.  As previously stated, the Company has historically excluded these items from non-GAAP financial measures. The Company currently expects to continue to exclude such items in future disclosures of non-GAAP financial measures and may also exclude other items that may arise (collectively, "non-GAAP adjustments"). The decisions and events that typically lead to the recognition of non-GAAP adjustments are inherently unpredictable as to if or when they may occur. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

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. 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," and include, without limitation, the Company's outlook for the third quarter and full year of Fiscal 2020, and risks associated with the ability to achieve a successful outcome for its portfolio brands and to otherwise achieve its business strategies. The Company does not undertake to publicly update or review its forward-looking statements even if experience or future changes make it clear that its 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. (NASDAQ:ASNA) is a national specialty retailer offering apparel, shoes, and accessories for women under the Premium Fashion (Ann Taylor, LOFT, and Lou & Grey) and Plus Fashion (Lane Bryant, Catherines and Cacique) segments, and for tween girls under the Kids Fashion segment (Justice). ascena retail group, inc. through its retail brands operates ecommerce websites and approximately 2,800 stores throughout the United States, Canada and Puerto Rico.

The Company completed the wind down of its Dressbarn brand during the second quarter of Fiscal 2020.  All Dressbarn store locations were closed as of December 31, 2019.  As a result, the Company's Dressbarn business has been classified as a component of discontinued operations within the consolidated financial statements for the three and six months ended February 1, 2020 and February 2, 2019 ceasing the reporting of the Value Fashion segment.

The comparability of the Company's operational results reported in accordance with U.S. generally accepted accounting principles ("GAAP") for the periods presented herein has been affected by certain transactions. The Company believes that the non-GAAP financial measures presented below, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating current period performance, trends and period-over-period comparative results.  The non-GAAP measures presented in this press release eliminate amounts that do not reflect the fundamental performance of the Company's businesses. These items include costs such as (i) restructuring, tangible asset impairments and other related charges including, but not limited to, charges incurred under the Company's cost reduction initiatives, and (ii) impairments of goodwill and other intangible assets.

Many investors also use non-GAAP measures as a common basis for comparing the performance of different companies.  A general limitation of non-GAAP measures is that they are not prepared in accordance with GAAP and may not be comparable to similarly titled measures of other companies due to differences in methods of calculation and excluded items. Non-GAAP measures should be considered in addition to, not as a substitute for, the Company's Operating income and Net income per common share, as well as other measures of financial performance and liquidity reported in accordance with GAAP.