Contributions from Ascena Retail Group Inc.’s last acquisition boosted the company’s third-quarter sales even as costs from its upcoming purchase of Charming Shoppes Inc. depressed its earnings.
The Suffern, N.Y.-based owner of the Dress Barn, Maurices and Justice nameplates reported that net income for the three months ended April 28 contracted 4.6 percent to $49.4 million, or 31 cents a diluted share, from $51.8 million, or 32 cents, in the 2011 quarter. Without costs related to the purchase of Charming Shoppes, expected to close in mid-June, EPS would have been 3 cents higher, or 34 cents, below the 36-cent consensus estimate. Operating income fell 1.3 percent to $85.3 million.
Sales in the quarter gained 8.4 percent, to $783.3 million from $722.8 million, as gross margin pulled back to 43.4 percent of sales from 44 percent a year ago. Same-store sales rose 5 percent, led by an 8 percent increase at Justice that balanced a 6 percent pickup at Dress Barn and 1 percent decline at Maurices. E-commerce sales rose 55 percent to $36 million.
Analysts, on average, expected revenues of $786.7 million.
The Justice brand, acquired with the company’s 2009 acquisition of Tween Brands Inc., paced the company’s net sales as well, increasing 11 percent to $287.8 million, while Dress Barn and Maurices advanced 6.3 and 7.5 percent, respectively, to $271.6 million and $223.9 million.
Responding to an analyst’s question during a Thursday evening conference call, David Jaffe, president and chief executive officer, said he felt weakness in retailing’s middle tier spelled opportunity for the Dress Barn division. “Clearly, there is something going on with that customer,” he said. “When that customer is out there, unhappy with what she’s seeing at a J.C. Penney or a Kohl’s, they’re our two biggest competitors. We think that some of those customer are going to wander into our stores and I think we’re going to continue to take share from them.”
Among the strategic emphases he cited in that effort are the presentation of a more focused assortment, a refinement of customer lists, improved window presentations and the expansion of the company’s loyalty program into an electronic version.
He cited Dress Barn’s 4 percent growth in year-to-date same-store sales as evidence of its capture of midtier market share. The division’s net sales are up 5.7 percent, to $747.2 million, in the first nine months of Ascena’s fiscal year.
For the nine months, Ascena’s net income added 12.9 percent to hit $160.6 million, or $1.01 a diluted share, while revenues expanded 10.3 percent to $2.41 billion.
Ascena agreed on May 2 to acquire Charming Shoppes, operators of the Lane Bryant and Fashion Bug plus-size specialty chains, for $890 million. Upon consummation of the deal, Charming will add more than 1,800 units to Ascena’s more than 2,500 stores in the U.S., Puerto Rico and Canada.
@juicebeauty, where @gwynethpaltrow holds the title of creative director of makeup, has become one of the foremost labels in the organic beauty category –– with sales on track to hit $100 million this year. What’s behind the rapid growth the brand is experiencing right now? It all started in 2005 when the wellness movement was just getting started. Read more on WWD.com. #wwdbeauty
Stay up to do date with breaking news and trending stories with WWD’s “The Essentialist.” Our newsletter delivers the top news in fashion right to your inbox. Want more info? Link in bio. #wwdfashion (📷: @kukukuba)
"I want to tell a story that inspires people to feel good about themselves, but also I'm making a commentary about the lack of female stories and female directors and saying this should change," said @imheathergraham on her latest project "Half Magic." The comedy feature, which the actress wrote and directed, is based on her own struggles as a woman in show business. Read @andrewnodell's full interview with Graham on WWD.com. #wwdeye (📷: @jgreenery)
@meltcosmetics cofounders @lora_arellano and @danabomar built their brand on a single idea: a true matte lipstick. To set the brand apart, they said they always put their customers first –– including a personalized note in each package. #wwdsummits #wwdbeauty
@moncler unveiled its latest project, #MonclerGenius, yesterday at Milan Fashion Week. The Italian outwear maker gave show-goers a preview of the monthly collections – which were created by eight designers and creative talents including Pierpaolo Piccioli, Simone Rocha, Craig Green and more – that will start rolling out in the summer.