Ascena Retail Profit Down, Outlook Weak; Shares Plunge 15%

(RTTNews) - Clothing retailer Ascena Retail Group Inc (ASNA) Monday reported a drop in profit for the fourth quarter, reflecting lower sales from Justice and Lane Bryant brands and higher operating costs. Earnings for the quarter fell short of estimates, as did revenues.

The company detailed a weak outlook for the full year 2015, sending its shares plunging 15 percent in extended hours.

Suffern, New York-based Ascena's fourth-quarter profit dropped to $15.7 million or $0.10 per share from $29.8 million or $0.18 per share last year. Adjusted earnings were $0.13 per share for the quarter. On average, 13 analysts polled by Thomson Reuters expected earnings of $0.18 per share for the quarter. Analysts' estimates typically exclude one-time items.

Ascena's revenues for the fourth quarter dropped 1.3 percent to $1.18 billion from $1.20 billion last year. Analysts had a consensus revenue estimate of $1.21 billion for the quarter.

The company said revenue decline was due to challenging tween market conditions at Justice and inventory-related issues at Lane Bryant. Ascena's apparel targets women, and tween girls and boys. The company operates under segments such as Justice, Lane Bryant, maurices and Catherines.

Commenting on the results, CEO David Jaffe said, "Despite mixed results across our portfolio and continuing soft traffic patterns, fourth quarter EPS was in line with our expectations. We have yet to see sustained evidence of market improvement, and as a result, are maintaining a conservative outlook as we enter the Fall season."

Total combined comparable sales for the quarter declined 2 percent, while gross margin inched up 54.7 to 54.6 percent last year.

Buying, distribution and occupancy costs rose to $206.5 million from $197.1 million last year, while selling, general and administrative expenses increased to $343.5 million from $330.8 million a year ago.

Looking forward to the fiscal year 2015, the company expects adjusted earnings of $0.90 to $1.00 per share. Analysts currently expect earnings of $1.25 per share for the quarter.

ASNA closed Monday's trading at $16.53, down $0.40 or 2.36%, on the Nasdaq. The stock further declined $2.49 or 15.06% in after-hours trade.