Ascena Retail Group Inc., hurt by markdowns and a sales decline at its Justice division, reported a 73 percent drop in net earnings for the quarter ended Jan. 24 to $8.7 million from $31.9 million in the year ago period.
The retailer said that for its second quarter of fiscal 2015, earnings from continuing operations were $0.05 per diluted share, compared to $0.19 in the same period of fiscal 2014.
Adjusted earnings from continuing operations in the second quarter of fiscal 2015 were $0.07 per diluted share, compared to $0.23 in the prior year’s second quarter.
Net sales for the quarter increased 1.7 percent to $1.29 billion, compared to $1.28 billion in the second quarter of fiscal 2014, as new store growth at Justice and Maurices and positive combined comparable sales at Lane Bryant, Maurices, Dress Barn and Catherines was offset by negative comparable sales at Justice.
“Looking back on the second quarter, while conditions remained very challenging at Justice, we saw performance improve across our other brands as we moved through holiday into January,” said David Jaffe, president and chief executive officer.
“We are excited about several of our major brand initiatives, including the continued rollout of our active-ath-leisure lines at multiple brands, our upcoming Cacique campaign, and our Dressbar launch,” which features designer collaborations on dresses and a store redesign at Dress Barn to spotlight the dress category.
Gross margin was $662 million, or 51.4 percent of sales for the second quarter, which was flat in terms of dollars but down from the prior year rate of 52.3 percent of sales. “The decrease in the gross margin rate was caused by significantly higher markdowns at Justice to clear seasonal inventory,” Jaffe said. “Excluding Justice, we saw gross margin rate improvement across all of our other brands, with the largest increase coming at Dress Barn.”
Ascena reaffirmed its guidance for adjusted earnings per diluted share from continuing operations in the range of $0.70 to $0.75 for the fiscal year ending July 2015. The company sees flat-to-modest negative total comp growth for the year, and is projecting total capital expenditures between $325 million to $350 million.
Ascena specializes in clothing, shoes and accessories for misses and plus-size women under the Lane Bryant, Cacique, Maurices, Dress Barn and Catherines brands; and for tween girls under the Justice brand.