Ascena Retail Group (ASNA) was formerly known as Dress Barn and was established in the year 1962 by Roslyn Jaffe. It is an American retailer of women’s clothing with its head quarters in Mahwah, New Jersey, United States of America. Ascena’s other clothing brands include Lane Byrant, Justice, Maurices, Dress Barn and Catherines and is the parent company of Ann Inc., an operator of Ann Taylor and Loft Stores. While the company has an impressive portfolio as a leading specialty retailer offering clothing, shoes, and accessories for plus-size women under the Lane Bryant, Cacique, Maurice’s, Dress Barn, and Catherine’s clothing brands, the name has struggled. About 25% of the company is owned by the Chairman- Elliot Jaffe and his wife and co-founder Roslyn.
On the morning of Wednesday the 1st of June 2016, the shares of Ascena Retail Group came tumbling by 7.13% to $6.70 on heavy trading volume, after the Mahwah, NJ-based retailer reported disappointing revenue for the 2016 fiscal third quarter and gave a down beat guidance. And by noon of Friday, June 03, 2016, the stock has further been dropped by another 2%.
After the previous day’s market close, the parent company of Ann Taylor, Loft and Lane Bryant posted revenue of $1.67 billion which was lower than analysts’ forecasts of $1.73 billion.
Adjusted earnings of 15 cents per share topped experts’ expectations of 13 cents per share.
The total comparable store sales fell by 4% during the quarter.
For fiscal 2016, the company expects adjusted earnings per share of 67 cents to 70 cents on revenue of about $7.1 billion, due to the current specialty retailer environment. Earnings from continuing operations of Ascena Retail Group were $0.08 per share compared to earnings from continuing operations of $0.15 per share in the same period of fiscal 2015 and $0.22 in the same 2014 quarter. The adjusted earnings from continuing operations in the third quarter of fiscal 2014 were $0.15 per share, down from $0.16 per share last year. This actually beat analyst estimates by $0.02. However, the trajectory is negative as in the 2014 quarter earnings were $0.27 per share.
Analysts are modeling earnings of 75 cents per share on revenue of $7.21 billion.
Oppenheimer maintained its “outperform” rating and $12 price target on the stock following the results.
In a note to its investors, the firm wrote “ASNA’s brands continue to fluctuate with May trends pre-Memorial Day similar to April’s. Memorial Day improved across portfolio given favorable weather (comps flat over the weekend); still, acceleration in trends expected in June/ July to reach lowered F4Q16 comp guidance of down 2-3%.”
The company’s sales volatility continues, but inventories were tightly managed.
About 4.04 million of the company’s shares changed hands so far today compared to its average volume of 2.57 million shares per day.
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The company’s weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.