GROWING TOGETHER OUR PATH TO SUCCESS 2015 Annual Report FISCAL YEAR 2015 was a year of transition and transformation at ascena. One that saw significant maturation of our shared services capability, the start of a turnaround at Justice, and the acquisition of ANN INC., which has transformed ascena into the third largest domestic specialty retailer, and the largest focused exclusively on the female consumer. FROM AN ENTERPRISE PROJECT unmatched levels of value and standpoint, we achieved two key fashion. We feel good about the milestones during the year – we direction of each of our brands, and completed the transition of all five are very excited to have welcomed of our brands into our Greencastle Ann Taylor, LOFT, and Lou & Grey to ecommerce fulfillment center, and our portfolio. Our brands will continue we successfully transitioned our to realize cost efficiencies from merchandising, store systems, and our Greencastle fulfillment center financial systems at Lane Bryant and throughout the coming year, with all Catherines onto our enterprise five brands operating in this center platform. The completion of these as of April of this past year. Our shared projects marks the end of the services group is aggressively remaining transformational activity working to capture the $150 million related to the Charming acquisition, in identified synergies related to and prepares us well for integration our acquisition of ANN INC., with activity related to our ANN INC. expected full realization of this acquisition. synergy run rate by the end of our Fiscal 2015 financial performance 2018 fiscal year. We continue to expect was mixed across our portfolio, with the ANN INC. acquisition to be a very strong performance at maurices highly accretive investment for our and Catherines, and acceleration shareholders, and we look forward to of the Lane Bryant business in the sharing best practices from both Spring season, offset by challenging organizations as we continue to work conditions at dressbarn and a full through integration planning. reset at Justice. Traffic trends continue On the strategic front, we remain to be challenging with Fiscal 2015 highly focused on development of our representing the third consecutive omni-channel platform. We expect our year of negative traffic across our omni-channel rollout to begin later portfolio. For the full year, our total this fiscal year, and are excited about enterprise comparable sales were the opportunity to leverage in-house down 1%, with the decline caused knowledge at our ANN brands, which by transitional conditions at Justice have been operating on an omni- as we exited non-performing channel platform for several years. merchandise, and introduced our new The bulk of our omni-channel project selling model for back-to-school. investment is behind us, and we Excluding Justice, combined believe we will see significant financial comparable sales were up 2%. benefits over time as we are able to Significant non-recurring costs offer our customer a seamless related to goodwill impairment at shopping experience. Lane Bryant, litigation at Justice, and Execution on fundamentals is integration expenses for the ANN INC. essential for long-term success, as we acquisition resulted in a loss from expect challenging macro conditions continuing operations for the year. to continue. Our brands remain highly Excluding these non-recurring costs, focused on controllable factors – income from continuing operations strong merchandising execution, was $98 million, down 40% to the prior effective customer engagement, and year, with the decline caused primarily disciplined inventory and expense by conditions at our Justice brand, management. We continue to reflecting the impact of an inventory differentiate our operating model overhang and the transition to a new, through ongoing development of our less promotional selling model. best-in-class shared services platform. Moving into Fiscal 2016, our We began Fiscal 2016 with all of our operating model remains the same – initial transformational projects to deliver value to our brands through behind us, and we are now focused on a highly efficient shared services integration of the ANN INC. brands platform, and to allow our brand teams into our scalable back-end, and to concentrate on their respective development of world-class omni- customer segments to deliver channel capabilities. ASCENA ANNUAL REPORT 2015 3 Justice Lane Bryant maurices Our Justice business is coming off For the year, Lane Bryant combined maurices had a record year, with its second straight difficult year, comp performance was up 2%. operating income performance up with operating income down We saw business accelerate during over 40% to last year. Our combined significantly from Fiscal 2014. While the Spring season, where adjusted 5% comp performance for the year we remain the market share leader operating margin was up reflected strong merchandising amongst specialty retailers in the significantly over the prior year, execution, delivery of “on-trend” tween category, we needed to reflecting better merchandising fashion and an integrated, omni- execute a complete turnaround, execution, as well as strategic pricing channel marketing experience. We inclusive of a new management and promotional changes. The brand continued to increase our design team, a refined merchandise finished the year with a significant and sourcing capability, approaching aesthetic, and an all new marketing operating loss, caused by a non-cash, 30% penetration heading into the Fall and promotion strategy. Total comp non-recurring goodwill impairment. season. Returns on our 40 new stores performance was down 10% for the Excluding this impairment, the brand exceeded expectations, our digital year as we transitioned the customer operated at a breakeven level, and momentum continued exceeding off brand erosive, everyday total we are encouraged by performance 30% growth, and we successfully store promotions. We are pleased coming out of the Spring season. grew our customer database. with the results we have seen during back-to-school selling, and believe the turnaround is progressing in line with our expectations. 4 ASCENA ANNUAL REPORT 2015 IN CLOSING, FISCAL 2015 WAS A BUILDING YEAR FOR ASCENA, which saw significant progress in development of capability supporting future growth. Our investments in our shared services platform have positioned us well for the integration of ANN INC., and we are looking to fully integrating Ann Taylor, LOFT, and Lou & Grey into our portfolio. As we move into Fiscal 2016, we are excited by the opportunities we have across all of our brands, and look forward to demonstrating the strength of our operating model. We thank our stockholders and suppliers for their continued support, as well as our talented team members and associates for their dedication and commitment. We remain confident that dressbarn Catherines the unique and scalable model we are creating positions dressbarn had a disappointing Catherines continued to perform us well - to better serve our year, caused by merchandising well, with operating income growth customers, enhance our execution challenges in the of almost 30% from Fiscal 2014. business and deliver sustainable Spring season. Combined comp Combined comp performance was growth and increased profits performance was down 1% for the up 5% for the year. We have seen 17 to our stockholders. year, but the business decelerated straight quarters of combined from Fall, where we saw the first comp growth as we continue to positive comp performance since deliver newness and fashion to an Fiscal 2013. Although the Spring underserved customer segment. season was a disappointment, we were encouraged by the launch of DRESSBAR, which enhanced our segment leadership in the dress category. DAVID JAFFE ELLIOT S. JAFFE President and Co-Founder and Chief Executive Non-Executive Officer Chairman WE’RE GROWING BY APPEALING TO “EVERY GIRL, EVERY DAY” Building our assortments to address diverse Girl Profiles. Increasing versatility and wearability through a redefined Fashion Pyramid. Training associates to serve as Style Advisors, customizing the experience and the looks to make every girl feel great. Enhancing the store experience to appeal to a broader lifestyle and customer need. BY RESTORING MOM’S VALUE PERCEPTION Lowering our ticket across all categories to position us more competitively. Offering compelling value across our assortment in the form of competitively priced, prominently-featured Style Buys. Respecting key category and occasion shopping periods through the targeted use of promotions. BY PUTTING FASHION FIRST IN ALL WE DO Presenting trend-right styles interpreted for tween girls in our stores, in our catazine, and in our digital touchpoints. Showcasing our Justice outfits with how-to-wear-it displays and with related styles merchandised in distinct fashion shops. Shifting the message from price to fashion in all of our commerce and marketing channels. BY FOCUSING ON MARGIN IMPROVEMENT Tightening inventory levels and implementing a chase process to maximize unit selling in high- performing styles. Demonstrating restraint in our use of promotions, eliminating deep discounts and unproductive bounce-back programs. Aggressively managing product costs while maintaining high product quality. 7 WE'RE GROWING FASHION LEADERSHIP IN APPAREL Through the continuation of designer collaborations, improved fashion trend stories, and the growth of important sub-brands like Livi Active and 6th & Lane. By