Ascena Retail Group posts Q4 GAAP loss of 0.08 dollar

For the fourth quarter of fiscal 2017, Ascena Retail Group reported a GAAP loss of 0.08 dollar per diluted share compared to GAAP earnings of 0.07 dollar per diluted share in the year-ago period. The company said, this decrease was primarily driven by the comparable sales decline of 4 percent, costs associated with the company's ‘Change for Growth’ transformation program, and the 53rd week in the year-ago period related to its reporting calendar. Non-GAAP adjusted earnings were 0.05 dollar per diluted share compared to 0.08 dollar per diluted share in the year-ago period.

Commenting on the company’s results, David Jaffe, Chief Executive Officer of Ascena Retail Group, said in a press release: “Our fourth quarter adjusted earnings per share of five cents came in well above our guidance range, reflecting a modest easing of store traffic headwinds. To be clear, conditions remain challenging - store traffic was down mid-single digits for the quarter, and we are planning for this trend to continue for the foreseeable future. While comp sales performance was several points better than our guide, we were not pleased with the results, and we will not be satisfied until we deliver positive, sustained enterprise-level comp sales.”

Ascena reports full year per share GAAP loss of 5.48 dollars

For full year, the company reported a GAAP loss of 5.48 dollars per diluted share which included a non-cash pre-tax impairment charge of 1.324 billion dollars (after tax impact of 5.22 dollars per diluted share) recorded in the third quarter to write-down a portion of the company's goodwill and other intangible assets. Also contributing to the loss was a comparable sales decline of 5 percent, costs associated with the company's ‘Change for Growth’ transformation program, and acquisition costs related to Ann Inc. The company reported a GAAP loss of 0.06 dollar per diluted share in the year-ago period. Non-GAAP adjusted earnings were 0.22 dollar per diluted share compared to 0.60 dollar per diluted share in the year-ago period.

Q4 net sales decline to 1.658 bn dollars

On a GAAP basis, the company said, fourth quarter net sales were 1.658 billion dollars compared to 1.812 billion dollars in the year-ago period. The company added that this decrease in sales reflected the impact of a 4 percent comparable sales decline, which was caused primarily by mid-single digit declines in average selling price and store traffic, offset in part by double-digit transaction growth in the direct channel. In addition, the year-ago period included approximately 82 million dollars associated with the 53rd week in its reporting calendar.

Gross margin on a GAAP basis decreased to 951 million dollars, or 57.4 percent of sales compared to 1,041 million dollars, or 57.5 percent of sales in the year-ago period. Gross margin dollars decreased year-on-year primarily as a result of the decline in comparable sales, along with the 53rd week included in the year-ago period, which represented approximately 48 million dollars.

Operating loss on a GAAP basis was 9 million dollars compared to operating income of 65 million dollars in the year-ago period.

Ascena reveals first quarter outlook

The company said, first quarter non-GAAP earnings per share are estimated in the range of 0.08 dollar to 0.13 dollar, assuming net sales in the range of 1.58 to 1.62 billion dollars; comparable sales in the range of down 4percent to down 5 percent; gross margin rate in the range of 60.8 percent to 61.3 percent; and operating income in the range of 55 to 70 million dollars.

Full year fiscal 2018 gross margin rate is currently expected to be in the range of 58.1 percent to 58.6 percent, including approximately 30 million dollars of gross margin dollar improvement related to Ann deal synergies and cost savings.

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