Ascena reported a net loss for the first quarter of $18.1 million or 10 cents a share, compared to last year’s net income of $53.5 million or 32 cents per share. The decrease was due to the acquisition of Ann Inc. and the adjusted fiscal first-quarter earnings of 36 cents per share handily beat the FactSet estimate of 28 cents per share.

Net sales increased 40 percent over last year to $1.67 billion, but missed the sales estimate of $1.77 billion. The operating loss for the quarter was $12 million versus last year’s operating income of $66 million. The decrease was due to operating losses at Ann, while the legacy brands Maurices and Lane Bryant reflected increased operating income.

Traffic was down, but average selling prices were up. The company has also chosen to be less promotional. Investors were pleased with the earnings announcement and the stock rose over 8 percent in after-hours trading to nearly $13.

David Jaffe, president and chief executive officer of Ascena Retail Group commented, “On the operating front, we were pleased with first-quarter earnings, which exceeded our expectations. We saw strong sales performance at Maurices and Lane Bryant, and significant gross margin rate recovery at Justice, Ann Taylor and Loft.”

Gross margins dropped from 58.2 percent of sales to 53.6 percent of sales due to the effect of the Ann Inc. acquisition. The company did not change its outlook for the full-year results, which are expected to be in the range of $0.75 to $0.80 a share.

Jaffe further commented, “Specific to the Black Friday/Cyber Monday period, we saw mixed performance across our portfolio. Importantly, we were very pleased with performance at Justice, which significantly exceeded our expectations during this critical peak period, delivering strong positive-comp performance despite a reduced level of promotional activity.”

Separately, a notification program began today, as ordered by the United States District Court for the Eastern District of Pennsylvania, to alert current and former Justice customers about a $50.8 million proposed class action settlement with Tween Brands Inc. and Ascena Retail Group Inc. (“Justice”). This settlement resolves a class action lawsuit about whether Justice misled shoppers by marking items “40% off” when this price was in reality the regular price. Justice denies all of the claims and says that it did nothing wrong.

Notices will be sent directly to potential Settlement Class Members and will appear in nationwide media outlets leading up to a hearing on May 20, 2016, when the Court will consider whether to grant final approval to the settlement.

load comments
blog comments powered by Disqus