Share “Ascena Retail 4Q net falls, but beats...”

Ascena Retail 4Q net falls, but beats Street view

Associated Press Published: September 19, 2012

SUFFERN, N.Y. (AP) — Ascena Retail's net income tumbled 94 percent in its fiscal fourth quarter, dragged down by costs related to its acquisition of Charming Shoppes Inc.

Its adjusted earnings topped Wall Street's view, but its earnings forecast for fiscal 2013 suggested that it could fall short of analysts' estimates. Its shares slipped in premarket trading.

The owner of the Dressbarn, Maurices and Justice brands had announced in May that it was buying the owner of Lane Bryant, Fashion Bug and Catherines Plus for approximately $890 million so that it could gain access to the large-size women's clothing market. Ascena is in the process of closing Fashion Bug's stores.

Ascena Retail Group Inc. reported on Wednesday that it earned $1.6 million, or 1 cent per share, for the period ended July 28, down from $28.2 million, or 18 cents per share, a year earlier.

Income from continuing operations fell to $11.2 million, or 7 cents per share, from $28.2 million, or 18 cents per share.

Stripping out the impact of the Charming buyout, earnings from continuing operations rose to 31 cents per share.

Analysts expected earnings of 29 cents per share, according to a FactSet survey. The estimates typically exclude one-time items.

Revenue rose 30 percent to $939.7 million from $725.8 million, driven by online sales and sales from new stores. Wall Street forecast $781.7 million.

Revenue at stores open at least a year, a key gauge of a retailer's health, increased 3 percent. This figure excludes results from stores recently opened or closed. Ascena says its results don't include online sales. Those sales surged 49 percent to $39 million, excluding Charming's results.

By brand, sales were strongest at Justice, where revenue at stores open at least a year climbed 5 percent.

For the full year, Ascena's earnings dropped 5 percent to $162.2 million, or $1.02 per share, from $170.5 million, or $1.05 per share, in the prior year. Annual revenue improved to $3.35 billion from $2.91 billion.

Revenue at stores open at least a year climbed 5 percent. Online sales increased 54 percent, on an adjusted basis.

Ascena anticipates fiscal 2013 adjusted earnings from continuing operations between $1.45 and $1.55 per share on revenue of about $5 billion. Analysts expect earnings of $1.55 per share on revenue of $3.65 billion.

The company plans to open approximately 180 to 200 stores and close 100 to 120 stores, ending the fiscal year with about 3,900 Justice, Lane Bryant, Maurices, Dressbarn and Catherines stores.

Shares of Ascena shed 26 cents, or 1.2 percent, to $20.75 in premarket trading. Its shares are down 8.3 percent from their 52-week high of $22.62 set on March 27.