The company, parent to Ann Taylor, Loft, Lane Bryant, Dress Barn and more, expects to post an 8 percent comparable-sales decline for its fiscal third quarter.
For the full fiscal year, comp sales are projected to be down 6 to 7 percent. And adjusted earnings per share are slated for 10 cents to 15 cents, a far cry from the 38 cents analysts projected.
The reaction from investors was immediate and visceral, pushing shares of the company down 34 percent to $1.85 in after-hours trading.
That decline left the company with a market capitalization of about $357 million — a fraction of the $2 billion the company paid for Ann Taylor in a 2015 cash and stock deal that signaled better times and a much rosier outlook.
“Industry-wide traffic headwinds and a highly elevated promotional environment have persisted at levels significantly above our expectations, resulting in a miss to our third-quarter sales and earnings outlook,” said David Jaffe, president and chief executive officer. “We have adjusted our second-half outlook to reflect this environment and limited near-term visibility, and no longer believe it appropriate to expect a stabilization of traffic and resulting normalization of comp sales against softer demand in the year-ago period.”
The ceo said specialty retail was in a period of “unprecedented secular change” and that operating conditions would “remain challenging for the next 12 to 24 months.”
Ascena is revving up its “Change for Growth” restructuring program, which includes new technology and a “fleet optimization program.” The firm expects to cut costs by $250 million to $300 million as opposed to the $150 million target.
The 4,900-door retailer said a tough environment and its stock decline require it to test its goodwill, which is likely to lead to “a material non-cash impairment charge” of its goodwill and intangible assets during the third quarter.
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