Ascena Retail Shares Fall Amid Q2 Beat, Lackluster Guidance

Ascena Retail Group

reported its second-quarter financial earnings today. The clothier is currently trading down $.80 per share after originally being up $0.58 during the day trading session. Ascena said that its second-quarter earnings dropped 15 percent, due to Justice clothier brand not producing enough profit and its general increasing operating expenses. As for guidance the company has lowered its earnings per share guidance and is now estimating $1.00 to $1.05 per share, this was amid an already lowered guidance of $1.10 to $1.15 per share. Investors were obviously not happy about this. For this quarter earnings from continuing operations were $0.19 per diluted share. Ascena posted a profit of $31.9 million, which was down from $47.2 million a year earlier. Some good news was that revenue increased to $1.27 billion which is up 2.3 percent, due to new store additions. David Jaffe, President and Chief Executive Officer of Ascena Retail Group, Inc., commented, “Second quarter net income was slightly above our revised expectations, despite softer than expected sales in January driven primarily by challenging weather that continued to negatively impact sales into early March. However, in warmer regions sales have been in line with expectations. We are implementing promotional strategies and receipt flow adjustments to bring inventory balances back to targeted levels.” Numerous companies have blamed the winter storms for their lack of sales including Ascena, “However, in warmer regions sales have been in line with expectations," Jaffe added. "We are implementing promotional strategies and receipt-flow adjustments to bring inventory balances back to targeted levels." Same-store figures fell three percent; the majority of analysts expected a growth rate of two percent. E-commerce sales skyrocketed 28 percent to $149 million. Gross margins also jumped to 54.3 percent from 53.5 percent. Shares of the retailer have remained fairly steady this year ranging from $19.0 to $22.0 per share.