Ascena Retail Group: Decline in comparable sales impacts Q1 performance

Ascena Retail Group, Inc., for its fiscal third quarter ended April 28, 2018 reported a GAAP loss of 0.20 dollar per diluted share compared to 5.29 dollars per diluted share in the year-ago period, which included a significant non-cash impairment charge to write-down a portion of the company's goodwill and other intangible assets. Non-GAAP adjusted loss for the quarter was 0.08 dollar per diluted share compared to non-GAAP adjusted income of 0.05 dollar per diluted share in the year-ago period.

Commenting on the third quarter trading, David Jaffe, Chief Executive Officer of Ascena Retail Group, said in a statement: “Our third quarter results reflected a soft start in February, with sequential improvement over the combined March / April period. Another strong quarter at Justice was offset by continued challenges at our value segment, particularly at Dressbarn.”

Other financial highlights of Ascena’s Q3

Net sales for the third quarter were 1,503.3 million dollars compared to 1,565.1 million dollars in the year-ago period, with the decline caused primarily by a 3 percent decline in comparable sales.

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Gross margin declined to 883 million dollars or 58.7 percent of sales compared to 948 million dollars or 60.6 percent of sales in the year-ago period. Gross margin dollars declined year-on-year, the company said, primarily as a result of the decline in comparable sales. Gross margin rate declined 190 basis points due to performance at the company’s value fashion segment, where both Maurice sand Dressbarn experienced significant declines.

Operating loss was 23 million dollars compared to 1,311.8 million dollars in the year-ago period due to the impact of the comparable sales decline. On a non-GAAP adjusted basis, operating income was 12 million dollars compared to 43 million dollars in the year ago period.

The company added that fiscal year 2018 fourth quarter non-GAAP earnings per share is estimated in the range of negative 0.05 dollar to positive 0.05 dollar, supported by net sales in the range of 1.62 to 1.66 billion dollars; comparable sales in the range of flat to up 2 percent; gross margin rate in the range of 56.5 percent to 57 percent, and operating income in the range of 22 to 42 million dollars.

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