Ascena Retail Group stock is up 8 cents to $12.05 after beating analyst estimates for fourth-quarter earnings by a penny.
Ascena reported that net sales decreased 1.1 percent to $1.17 billion, but this also beat the consensus for sales of $1.16 billion. Ascena delivered earnings in the fourth quarter of fiscal 2015 of 6 cents a share, while FactSet consensus was for 5 cents a share.
Ascena enjoyed positive combined comparable sales at Lane Bryant, maurices and Catherines, offset by negative comp sales at Justice and dressbarn.
David Jaffe, President and Chief Executive Officer of Ascena Retail Group commented, “Results for the quarter were challenged by two large, non-operating expense hits related to a goodwill and trade name impairment at Lane Bryant and litigation activity at Justice. On the operating front, Justice had a difficult quarter as expected, and dressbarn missed expectations due to assortment challenges. With all that said, we were pleased with fourth quarter performance at maurices, Lane Bryant, and Catherines.
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Jaffe also commented that mall traffic continues to be challenging, but did suggest that back-to-school performance at Justice was going well and exceeding expectations. The company has also begun a new selling model that seems to be working at Justice. The Justice pricing lawsuit cost the company $50 million causing a difficult quarter for the group.
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Drivers at Lane Bryant include getting trend right, bringing in more knit business and the company is very happy with merchandise. The “I’m No Angel” campaign and the “Plus is equal” campaign has established the brand as a leader in the category.
The company gave guidance for the fiscal year ending in July 2016 in the range of 75 cents to 80 cents. The guidance includes the acquisition of ANN and expects the new acquisition to add 5 to 10 cents per share. Ascena believes it will be able to capture $150 million in synergies with the ANN acquisition.