Ascena Q3 Profit Beats Estimates, Sales Edge Up

ascenaSuffern, NY—Ascena Retail Group Inc. late Tuesday reported its third quarter profit rose, beating estimates as sales edged upward.

For the quarter ended April 26, Ascena posted net profit of $33.2 million, or 20 cents a share, from $31.2 million, or 19 cents a share, in the same quarter a year ago. Adjusted net income was $44.8 million or 27 cents a share. Analysts’ average estimate was for 19 cents a share.

Updated Guidance

Revenue edged up to $1.15 billion versus $1.14 billion a year earlier, just missing analysts’ consensus for $1.17 billion in sales.

Ascena’s company wide comps, including e-commerce comps, slipped 1% year over year, as a result of a 3% dip in store comps, partly compensated by 19% growth in e-commerce comps. E-commerce comps were boosted by new web innovations, exclusive online offers and promotions.

Comps at Justice and dressbarn were down 4% each, while Lane Bryant, maurices and Catherines registered year-over-year comps growth of 1%, 2% and 4%, respectively.

Ascena’s company wide comps, including e-commerce comps slipped 1% year over year, as a result of a 3% dip in store comps, partly compensated by 19% growth in e-commerce comps. E-commerce comps were boosted by new web innovations, exclusive online offers and promotions.

Gross profit climbed approximately 2.6% to $675.0 million in the prior-year period, while as a percentage of sales, it expanded 130 basis points (bps) to 58.9% from the year-ago level. The year-over-year rise in gross profit mainly benefited from a fall in markdown operations across all its brands.

Selling, general and administrative expenses rose 2.4% to $340.4 million while as a percentage of sales, it expanded 60 bps to 29.7%. SG&A expenses rose due to soaring marketing expenses, increased headcount and initiatives undertaken to achieve synergies.

Ascena Retail Group also issued an update on its full year earnings guidance on Tuesday morning. The company now expects earnings per share of $1 to $1.05. Analysts estimate is for $1.05 a share.

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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com