Okay now I would like to go back to Maurice's for just a second as it is relevant going forward as Ascena still owns 49% of the company. First the company that acquired it and a little bit about their history then what we may see going forward from Maurice's. OpCapita Consumer Opportunities Fund II LP, advised by OpCapita LLP ("OpCapita"), a private equity firm specializing in the operational improvement of businesses in the retail, consumer and leisure industries.
""OpCapita has considerable expertise in value apparel retail, most notably demonstrated by its successful turnaround of NKD, a leading European value clothing retailer operating approximately 1,800 stores, which it sold to funds advised by TDR Capital on 19th March 2019. Under its ownership, OpCapita significantly improved the profitability of the business through operational improvements, seeing NKD restored from a heavily loss-making enterprise at the time of initial investment in 2013 to one generating significant earnings.""
Why does this mean a hill of beans for Ascena? First and foremost we are their partners now and share 49% going forward in earnings and in any future sale of the company. Now with the NKD endeavor just quoted it shows, they are an outfit that knows what they are doing and have proven they can take a company and cut costs, turnaround losses to gains and then sell it for a profit simple. Now Maurice's was not in such bad shape when it was sold, it had some falling comps but was not a big money loser as of late at the numbers from Q3 show
Net sales $238 million
Comparable sales +1.0%
Gross margin 56.9%
Operating Income $32 million
Income tax $7 million
Net Income $25 million
Maurice's still had significant attractiveness to a potential buyer and for Ascena to work a deal to retain some ownership. So Maurice's came through adding $200 mil liquidity and should add going forward to the bottom line. Obvious choice for Ascena sell Maurice's retain ownership close Dress Barn.
So going forward when Lane Brant/Catherine's is sold after selling majority stake in Maurice's and closing Dress Barn. Well first lets see what they gain in the way of stemmed losses going forward, which is what this game is all about, the game I am referring to is investing.
We already stated the obvious, the addition of $200 million in liquidity to help with closures of Dress Barn cost etc, which seems to be totally ignored by those wishing to live in drama land. Not to mention to share in the future earnings and future sale when it is back to firing on all cylinders which as I pointed out is not a task that will be as hard as one might think with the focus of a partner that knows what they are doing and most of all focus on getting it done without 6 other brands to worry about. Closing of Dress Barn that is a no brainier, that decision will and already is cutting losses now and going forward with the closure of over 100 Dress Barns 53 were closed by mid July.
hat is first and foremost a lot of operational losses going forward cut, gone. Yes, some revenue loss will be there as it will be by closing all the Dress Barns but closing them all by December under favorable terms means going forward 650 stores will not be losing them money all those losses gone, the revenues lost means nothing as the yearly losses far outweigh anything else. Whether you do $5 billion or $4 billion in revenues it doesn't matter you are still a massive Fortune 500 company. What matter is how much you add to your bank account not how much flows through it. This is just another thing that made us say wait a minute things are looking good going forward after there plan is executed which seems to be going at a rather steady pace with all the right moves being made. Does it hurt, are there some re-adjustment pains yes, but, to have it valued as if it were a chain of car washes, seriously who is trying to pull the wool over everyone's eyes?
