By Neil Saunders
While the closure of Dressbarn was not inevitable, given the company’s dire performance, it comes as little surprise that Ascena has decided to head for the exit. Over the past few years, Dressbarn has lost customers, sales, and share; it has also been unprofitable. Over recent quarters, those losses have accelerated and have shown no signs of reversing.
Aside from a few failed efforts to revive the brand, Ascena really never invested in Dressbarn and let it stagnate to the point where it has become completely out of touch with the needs of modern shoppers. Even the name now feels old fashioned and dull. There is a particular issue with the younger family demographic for whom Dressbarn isn’t even on the radar.
While Dressbarn stood still, other retailers have stepped in with much more exciting propositions. Off-price players, value retailers like H&M, variety stores like Target, and even department stores such as Kohl’s have all taken clothing share from Dressbarn over recent years.
As a value-focused retailer, Dressbarn needs volume to succeed. Yet all of the current trends are eroding volume and therefore undermining its business model. That’s why there appears to be no future for the business, including a lack of potential buyers.
As much as this is a sensible financial decision for Ascena—a group which was born out of Dressbarn—it does represent a loss of face. Ascena has always sold itself on the basis of being a strong operator in the apparel segment, serving a wide range of demographics, occasions, and styles. However, the reality is that Ascena is operationally weak and has done a relatively poor job of managing its individual brands for growth.
Although future moves may not be as dramatic, it is unlikely that the shuttering of Dressbarn will be the last restructuring from Ascena as the group tries to turn around its performance.
Neil Saunders is managing director of GlobalData Retail.