SUFFERN, N.Y. (AP) -- Ascena, the owner of clothing stores including the Lane Bryant and dressbarn chains, on Thursday cut its profit outlook for the year after weak holiday sales and increased discounting.
Shares slid $1.62, or 8.9 percent, to $16.50 in premarket trading. The stock has dropped 11 percent over the past three months.
The holiday shopping season — November and December — is a critical period for retailers, as it can bring in as much as 40 percent of their annual revenue.
The company is having to mark down prices in its fiscal second quarter, which runs through January, in order to sell its merchandise, said CEO David Jaffe.
Because selling clothes at a discount brings in less profit, the company is cutting its outlook. For the fiscal year ending July 27, Ascena Retail Group Inc. now expects to post a profit of $1.30 to $1.30 per share, down from its previous prediction of $1.45 to $1.55 per share.
Analysts polled by FactSet expect a profit of $1.55 per share.
Revenue at stores open at least a year from the company's stores fell 2 percent in November and December. The metric is a key measure of a retailer's health, because it excludes sales at stores that recently opened or closed.
Revenue from Ascena's websites rose 30 percent, however.
Ascena, which is based in Suffern, N.Y., runs about 3,800 Justice, Lane Bryant, maurices, dressbarn and Catherines stores in the U.S. and Canada.