Ascena Retail Group posts Q1 earnings of 0.07 dollar

Ascena Retail Group reported GAAP earnings for its fiscal first quarter ended October 29, 2016 of 0.07 dollar per diluted share compared to a net loss of 0.10 dollar in the year-ago period. Net sales were 1.678 billion dollars compared to 1.672 billion dollars in the year-ago period, which excluded around 122 million dollars of Ann sales in the stub period that preceded the Ann acquisition date. The company said increase in sales from the inclusion of Ann for the full quarter was offset by the 5 percent comparable sales decline.

"I’m pleased that our efforts delivered first quarter non-GAAP earnings in the middle of our guidance range. We reacted decisively to unfavourable selling trends in September through more aggressive, but targeted and effective promotional activity. We also reduced operating costs and planned capital expenditures that will benefit full year earnings and free cash flow," said David Jaffe, President and CEO of Ascena Retail Group in a statement.

First quarter results in detail

Gross margin increased to 1,014 million dollars or 60.4 percent of sales, for the first quarter compared to 903 million dollars or 54 percent of sales in the year-ago period. The company reported net income of 14 million dollars or 0.07 dollar per diluted share in the quarter compared to a net loss of 18 million dollars last year, or 0.10 dollar per diluted share.

Second quarter and fiscal 2017 outlook

Excluding restructuring, acquisition and integration related expenses, and non-cash Ann purchase accounting adjustments, the company expects non-GAAP EPS of 0.05 dollar to 0.00 dollar during the second quarter of fiscal 2017 and continues to expect full year non-GAAP EPS in the range of 0.60 dollar to 0.65 dollar.

Regarding second quarter performance, Jaffe said, “Selling has picked up a bit following a very difficult period leading to Election Day. Total comp sales were up 2 percent for the nine day period from the weekend preceding Thanksgiving through Cyber Monday. Market conditions are challenging, and at this time, we believe it is prudent to assume that they will remain so. The tough environment certainly highlights the necessity of the transformation we are executing, and we are working to ensure that Ascena emerges as a strong competitor."

Picture:Ann Taylor