Ascena Retail Group Inc.’s deal to bring Charming Shoppes Inc. into the fold weighed on fourth-quarter earnings.
Net income fell to $1.6 million, or 1 cent a share, from $28.2 million, or 18 cents, a year earlier. Sales for the three months ended July 28 rose 29.5 percent to $939.7 million from $725.8 million.
Ascena is liquidating Fashion Bug and plans to sell Figi, both of which were picked up in the Charming Shoppes deal.
David Jaffe, president and chief executive officer, told analysts on a conference call that the plans for Charming’s Lane Bryant and Catherines businesses remain “fluid.”
“We expect to streamline infrastructure, eliminate redundancy and create synergies,” Jaffe said. “The strategic state with Charming, as expected, is very good and this transaction both illustrates and reinforces our strategy to serve as a diversified group of growing brands in specialty retailing.”
Excluding the impact of the Charming deal, adjusted income from continuing operations rose to $49 million, or 31 cents a diluted share, from $28.2 million, or 18 cents, a year earlier.
Jaffe also said he was keeping a close eye on the recovery.
“We’re clearly watching the macroeconomic picture,” he said. “We view the consumer as hesitant. There are obviously many economic factors at play that are impacting our customers, in particular, the soft employment picture. Additionally, as you can appreciate, we are in the midst of an election cycle and we think consumers are somewhat distracted and may prove more willing to spend when the uncertainty about the future is resolved by the election.”
For the full year, Ascena’s net earnings slipped to $162.2 million, or $1.02 a diluted share, from $170.5 million, or $1.05, last fiscal year. Sales gained 15.1 percent to $3.35 billion from $2.91 billion.
The company’s nameplates also include Justice, Lane Bryant and Dress Barn.