Ascena Retail Group Inc. (ASNA) posted sales data for its holiday period stretching from Nov 22, 2014 through Jan 4, 2015.
Though consolidated comparable store sales (comps) for the period climbed 2%, lower-than-expected performance and a discouraging outlook for the Justice brand triggered management to lower its earnings per share guidance for fiscal 2015. Shares slipped 1.7% on the index.
However, the holiday shopping season this year has been an uplifting one for most retailers, with many of them reporting solid sales numbers for the combined November and December months in 2014. Some retailers with solid sales results include Macy's, Inc. (M), American Eagle Outfitters, Inc. (AEO) and Aeropostale, Inc. (ARO).
Coming to Ascena, the consolidated comps mentioned above incorporate both, comparable store and eCommerce sales. The rise in comps was mainly driven by the promotional activity which took place after Christmas.
Going by brands, we note that Ascena’s portfolio witnessed mixed results. While maurices, dressbarn and Catherines delivered 8%, 4% and 12% growth respectively, Lane Bryant’s comps came in lower than expected, showing just a 1% rise. On the contrary, comps at the Justice brand dipped 3% over the holiday season, owing to persistent weakness in the brand.
Management stated that Justice brand’s results lagged expectations as it did not perform as per plans in the holiday season, primarily due to softer-than-expected sales and heightened promotional activity. Also, Ascena prefers to remain cautious of Justice brand’s Spring performance.
Consequently, the Zacks Rank #4 (Sell) company lowered its earnings guidance for the fiscal year. Ascena now envisions fiscal 2015 earnings to range from 70–75 cents per share, as against 90 cents to $1.00 forecasted earlier.
Since the Justice brand has been disappointing lately, management is making efforts to bring about a turnaround in it. The company is making necessary adjustments in the brand’s promotional strategy and also revising its planned Spring receipts. Moreover, the company plans to get its President brand going soon in order to speed up transformation at the Justice brand.
Although the process will take time, management remains confident that it will achieve strong growth over the long term and boost shareholder value.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment