Suffern, NY—Ascena Retail Group reported Thursday that its first quarter profit declined 1% despite increased sales due to one-time expenses.
For the quarter ended Oct. 29, Ascena, which operates dressbarn, maurices and Justice stores, posted a net income of $47.5, or 60 cents a share, from $48 million, or 60 cents a share a year ago. One-time charges included $4.2 million compared with $2.5 million last year.
Excluding those charges, the adjusted income grew to $51.7 million, or 65 cents a share, and was better than analysts’ average estimate expecting 64 cents a share.
Total sales increased 8% to $768.3 million, from $713.3 million last year, and ahead of analysts’ estimate for $762.6 million in sales. Total comparable store sales grew 4% helped by a 4% comparable store sales increase at maurices, and an 8% comparable store sales increase at Justice. Dressbarn posted flat comparable store sales.
Gross margin narrowed to 42.3% from 42.7% last year and operating margin declined to 10% from 10.9% in the year ago period.
‘Communicated Our Value Proposition Very Effectively’
“While the retail environment remained challenging, our consumers reacted favorably to compelling assortments at each of our brands and to a targeted marketing and promotional strategy that communicated our value proposition very effectively, which kept our inventory at proper levels,” said David R. Jaffe, president/ceo.
Heading into its second quarter, which includes holiday, Jaffe said “we remain comfortable” that the specialty retailer will achieve its plan.
As a result, the company reaffirmed its full year forecast to earnings of $2.55 to $2.65 a share with a comparable store sales increase in the mid-single digits. Analysts’ average estimate expects full year earnings of $2.58.
The company plans to open about 125 to 135 stores and close 30 to 35 stores, ending fiscal 2012 with about 2,600 dressbarn, maurices and Justice stores.