Ascena Retail Group Inc. has lowered guidance for fiscal 2015.
For fiscal-year 2015, ending July 25, the company now expects earnings per share from continuing operations of between 57 cents and 60 cents from earlier guidance of between 70 cents and 75 cents. The decision to lower guidance was due primarily to reflect the plan to accelerate its merchandise transition at Justice, as well as incorporate lower-than-expected sales at its Justice and Dressbarn nameplates, the company said Friday.
Ascena also said it plans to take a noncash, pretax goodwill and asset impairment charge in the fourth quarter in the range of $275 million to $325 million in connection with its Lane Bryant operation, as well as a pretax charge of $50 million to set aside as a reserve for the future settlement of the previously disclosed Justice class-action litigation.
The lawsuit, filed in February in a federal district court in Philadelphia, alleged that the tween retailer advertised discounts, although the prices were supposedly never discounted.
David Jaffe, president and chief executive officer, explained that the quarter was challenging at Justice due to the sell-down of spring and summer merchandise coupled with a reduction in promotional activity. The company determined to take a more aggressive sell-down of the merchandise to have a cleaner selling floor for fall. “We expect our actions will enable a better start to fiscal-year 2016 performance at Justice. We are excited to better align our product, pricing and marketing initiatives, and expect ultimately to see a strong, sustainable improvement in store-level performance across the chain,” he concluded.
Jaffe also said the company didn’t see a sales rebound at its Dressbarn business as it came out of the third quarter, and was “disappointed with the performance of our tops assortment, specifically at higher price points. We are making adjustments to our fall value pyramid to address this concern.”
The ceo said the performance of the rest of the company’s operations “is performing consistent with our expectations.”
Ascena in May agreed to acquire Ann Inc. in a deal valued at $2.15 billion.
The company plans to discuss fourth-quarter and full-year results, as well as initiate guidance for fiscal-year 2016, on its conference call in mid-September.
Shares of Ascena on Friday closed up 0.1 percent to $16.37 in Nasdaq trading.