...Unique Business Model: Ascena Retail Group, Inc. (Ascena) has taken a private equity-like approach to women's and tween girls' apparel retail, creating a scalable operating platform to onboard new brands. The 2015 transformative ANN, Inc. (Ann) acquisition added three new brands and $2.5 billion to Ascena's sales base of $4.8 billion. If successful, the acquisition will demonstrate the company's ability to purchase new brands and leverage its sourcing and back- office infrastructure while driving revenue growth. Exposure to Challenged Sector: Ascena primarily competes in the mid-tier women's apparel sector, with its Justice brand (17% of pro forma revenue) selling to tween girls. Mid-tier women's apparel retailers have been struggling to grow revenue, facing increased competition from low-priced players (i.e. the fast fashion and off-price sectors) and online retailers, exacerbated by mall traffic declines and the absence of a strong fashion cycle. Industry challenges have inflated inventory...
