Ascena Retail Group (ASNA) Tops Q3 EPS by 2c; Lowers Outlook

Ascena Retail Group (NASDAQ: ASNA) reported Q3 EPS of $0.15, $0.02 better than the analyst estimate of $0.13. Revenue for the quarter came in at $1.67 billion versus the consensus estimate of $1.73 billion.

David Jaffe, President and Chief Executive Officer of ascena retail group, inc., commented, "We continued to make progress in the third quarter with key catalysts in our business. The turnaround at Justice is progressing as planned, with improved performance versus last year driven by continued strength in gross margin rate. Our integration of ANN is progressing well, and we remain confident in our $235 million target for deal synergies and cost savings by the end of Fiscal 2018. I am especially pleased with the product-driven strength we have seen at LOFT, which was a bright spot in the quarter."

Jaffe continued, "At the same time, the environment this Spring has been challenging. After the disruption of a warm holiday season, we’ve had to contend with an unseasonably cold spring and resulting elevated traffic headwinds. While I think we have managed the business well, particularly with respect to inventory levels, we were not able to fully mitigate these challenges. Our earnings exceeded the upper end of our guidance range for the third quarter, but I’ll note that performance benefited from some favorable expense timing that offset softer than expected top-line performance. These expenses will come back in the fourth quarter, and combined with the traffic challenges we’ve seen continue through May, we’ve adjusted our earnings outlook downward."

Jaffe concluded, "We continue to focus on controlling the things we can control - delivering outstanding customer experiences in our stores and online to maximize our traffic opportunity, maintaining tight inventory and cost discipline, continuing the successful integration of ANN, and driving forward our strategic initiatives. Finally, as we continue to navigate the changing dynamics of our sector, we're assessing our operating model to maximize the profit potential of our diversified brand portfolio and shared services platform, and build upon our ongoing synergy and growth initiatives. Earlier this month, we retained Accenture, a leading global professional services company with expertise in supporting business transformation, to proactively engage with us in an enterprise-wide transformation project. We’re excited about the opportunity this project represents for enterprise profitability, and will share more detail on this project later in the year after it is fully scoped."

The Company’s comparable sales data for the fiscal third quarter is summarized below:

GUIDANCE:

Ascena Retail Group sees FY2016 EPS of $0.67-$0.70, versus the consensus of $0.75. Ascena Retail Group sees FY2016 revenue of $7.1 billion, versus the consensus of $7.2 billion.

For earnings history and earnings-related data on Ascena Retail Group (ASNA) click here.

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