Ahead of the Bell: Ascena Retail Group

Ascena Retail rises in premarket following better-than-expected fiscal 2nd quarter

Associated Press

NEW YORK (AP) -- Ascena Retail climbed more than 13 percent in trading before the bell Tuesday following the clothing store's stronger-than-expected second quarter.

On Monday the Suffern. N.Y. company, which owns Lane Bryant, Dressbarn and other clothing chains, reported quarterly adjusted earnings from continuing operations of 26 cents per share. Revenue rose 44 percent to $1.24 billion. Analysts polled by FactSet expected earnings of 23 cents per share on revenue of $1.23 billion.

Ascena maintained its full-year forecast for adjusted earnings between $1.20 and $1.30 per share. Wall Street predicts $1.24 per share.

Citi Investment Research's Oliver Chen said that Ascena has managed its inventory well in part by using promotions to get rid of fall merchandise.

The analyst said that the company has a top management team and compelling brands, but said he will stay on the sidelines because it has yet to be determined how well its spring performance will be.

Yruma kept a "Neutral" rating and boosted the company's price target to $21 from $18.

Edward Yruma of KeyBanc Capital Markets said that Ascena had a "respectable" quarter, but the analyst believes its customers are still vulnerable to economic pressures.

"Ascena management was forthright in noting that its customer remains pressured and believes that challenging trends will persist into spring," he wrote.

Yruma reiterated a "Hold" rating.

Shares of Ascena Retail Group Inc. gained $2.26 to $18.79 before the market open.

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