Ascena's 4Q profit beats expectations

Ascena's 4th-quarter profit blows past market expectations; shares jump after hours

Associated Press

SUFFERN, N.Y. (AP) -- Ascena Retail Group Inc.'s shares soared in extended trading Tuesday after its fiscal fourth-quarter profit came in far ahead of market expectations.

The company, based in Suffern, N.Y., owns the Justice, maurices, dressbarn and Catherines retail chains. It acquired Charming Shoppes Inc. in June of 2012 to add plus-size women's clothing chain Lane Bryant. It later shed brands it didn't want, such as Fashion Bug, in an effort to reshape its business.

Ascena got a boost from the acquisition, as well as improved gross margins as it marked down fewer items, particularly at its dressbarn and Catherines chains.

The company reported after the market closed that its net income jumped to $29.8 million, or 18 cents per share, for the quarter that ended July 27. That is compared with net income of $1.6 million, or 1 cent per share, in its fourth quarter last year. After adjusting for costs tied to the acquisition and other special items, it earned 34 cents per share in the most recent quarter.

Revenue increased to $1.2 billion from $939.7 million.

Analysts polled by FactSet, on average, were anticipating earnings of 20 cents per share on revenue of $1.15 billion.

Revenue from stores open at least a year increased 2 percent for the quarter, excluding online sales. This is considered a key industry indicator of performance as it strips away the impact of recently opened or closed stores.

President and CEO David Jaffee said that he was pleased with sales trends improving across all its brands during the quarter. However, he said that the company expects macro-economic factors to continue to pressure the apparel industry and said Ascena has taken a conservative approach to its fall planning.

The company said it expects to earn on an adjusted basis between $1.25 and $1.30 per share for its 2014 fiscal year. Analysts had forecast $1.33 per share for the year.

Ascena expects its revenue from stores open at least a year will increase in the low single digits.

The company plans to open about 180 to 190 stores and close 115 to 125 stores, ending the fiscal year with about 3,925 stores in operation.

Ascena earned $151.3 million, or 93 cents per share, for its most recent fiscal year, versus $162.2 million, or $1.02 per share, in the prior. Annual revenue increased to $4.71 billion from $3.35 billion.

The company's stock jumped $2.50, a 14.4 percent increase, to $19.85 in after-hours trading following the report. It fell 29 cents to close regular trading at $17.32.

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