Ascena Retail Group Inc. said its earnings fell 27% on higher
costs that offset a modest increase in the women's apparel
retailer's sales and improved margins during the quarter ended in
April.
The owner of brands such as dressbarn, Justice and Lane Bryant
in May reached a $2 billion deal for the parent of the Ann Taylor
and Loft chains. The acquisition of Ann Inc. will add two storied
names in women's apparel to a company that has made much of its
money selling plus-size clothing to shoppers who often are
middle-aged.
The combined company will be one of the largest sellers of
women's clothing, with annual sales of $7.3 billion and more than
4,900 stores.
Chief Executive David Jaffe said in a news release Tuesday that
while performance at dressbarn was softer than expected in the
latest quarter, weather and flow from the ports "were major
factors, and we remain confident in the momentum being built."
Mr. Jaffe also said the leadership team at Justice is developing
new marketing and pricing strategies for fall, which it expects to
introduce in July, in time for the back-to-school season.
For its fiscal third quarter ended April 25, Ascena reported a
profit of $24.4 million, or 15 cents a share, down from $33.2
million, or 20 cents a share, a year earlier. Excluding
acquisition-, integration- and restructuring-related impacts and
other items, per-share earnings from continuing operations fell to
18 cents, from 27 cents. Net sales increased 0.5% to $1.15
billion.
Analysts polled by Thomson Reuters expected per-share profit of
19 cents and revenue of $1.16 billion.
Gross margin rose to 58.7% from 57.4%, including the eighth
straight quarter of improvement at dressbarn.
Overhead costs rose 9%, and buying, distribution and occupancy
expense increased 3.1%.
In the latest quarter, Ascena's comparable-store sales dropped
1% overall, which reflects a 3% decline at stores and a 13%
increase at e-commerce operations.
Ascena also affirmed its annual outlook.
In May, Ann Inc. reported a weaker-than-expected 1.2% increase
in first-quarter sales as the retailer continued to struggle with
weak customer traffic and a retail environment marked by heavy
discounting and tough competition.
Write to Tess Stynes at tess.stynes@wsj.com
Access Investor Kit for ANN, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0356231078
Access Investor Kit for Ascena Retail Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US04351G1013
Subscribe to WSJ: http://online.wsj.com?mod=djnwires