Ascena Q2 Profits Nearly Double

Addition of Justice chain boosts results.

Second-quarter profits at Ascena Retail Group Inc., formerly Dress Barn, nearly doubled following the November addition of the Justice chain.


Quarterly profits rose to $42.5 million, or 52 cents a diluted share, from $21.7 million, or 28 cents, a year earlier. Sales for the quarter ended Jan. 29 spiked 26.6 percent to $752.2 million from $594.1 million.


Comparable-store sales at the Maurices chain rose 17 percent, while Justice comped up 11 percent and Dress Barn inched up 1 percent.


Adjusted profits of 57 cents a share topped Wall Street estimates by 5 cents.


Ascena also raised adjusted earnings guidance for the fiscal year to $2.28 to $2.33 a share, up from the $2.20 to $2.25 previously projected.


Wall Street continues to prod fashion retailers about how they’ll be affected this fall by higher prices for cotton and other commodities. On a conference call with analysts, David Jaffe, president and chief executive officer, said costs would rise from 5 percent to 15 percent depending on product.


“We are focused on strategies to minimize the impact of our increases in sourcing costs,” Jaffe said. “Each of our brands has a different degree of price elasticity, and the merchandising teams are evaluating the appropriate actions regarding price increases. The information we learned about this inflationary trend in the business has only reinforced our belief that these cost increases are here to stay.”


Jaffe also sought to dispel rumors that Ascena was looking for an acquisition, noting the company was busy developing a shared service model. But he left the door open for the future. “There are some interesting opportunities out there,” he said. “We’re not looking at them right now; it doesn’t mean that in the future we won’t consider an acquisition.”


The Dress Barn Inc. merged with the owner of the Justice chain, Tween Brands Inc., in November and then changed its name.


Shares of the Suffern, N.Y.-based retailer fell 90 cents, or 2.9 percent, to $30.37 Wednesday.