Ascena 1Q revenue metric growth slows

Ascena says growth for key revenue metric slows in 1st quarter, shares drop

Associated Press

NEW YORK (AP) -- Shares of Ascena Retail Group dropped nearly 4 percent on Thursday as growth for a key revenue metric slowed in the first quarter.

THE SPARK: Ascena, owner of Dressbarn, Justice and other brands, said Wednesday that first-quarter revenue at stores open at least a year rose 1 percent. This figure is a key indicator of a retailer's health because it excludes results from stores recently opened or closed. Ascena said that the results don't include online sales.

In the prior-year period, revenue at stores open at least a year climbed 4 percent.

Ascena's quarterly earnings fell to $43.1 million, or 27 cents per share, from $47.5 million, or 30 cents per share. Excluding an accounting adjustment and acquisition-related costs, earnings were 39 cents per share.

Revenue increased to $1.14 billion from $768.3 million.

Analysts surveyed by FactSet forecast earnings of 34 cents per share on revenue of $1.14 billion.

THE ANALYSIS: KeyBanc Capital Markets' Edward Yruma said in a client note that sales trends were volatile in the quarter and that promotions have increased at Dressbarn and Lane Bryant.

Ascena acquired Charming Shoppes' Lane Bryant and other women's brands earlier this year in an approximately $890 million deal.

Yruma said Dressbarn and Lane Bryant's November results were weak, partly because of Superstorm Sandy.

But the analyst said that Ascena's quarterly results were solid. He maintained a "Buy" rating and $25 price target.

SHARE ACTION: Ascena's stock shed 90 cents, or 4.5 percent, to $18.90 in afternoon trading. Over the past year, the shares have traded in a 52-week range of $13.64 in mid-December 2011 to $22.62 in late March. The stock is down 35 percent for the year to date.

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