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Ascena Retail Group reports flat Q1 net sales

By Prachi Singh

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REPORT_ Ascena Retail Group announcing its financial results for its fiscal first quarter ended October 25, 2014 said that its net sales of 1.2 billion dollars for the first quarter of fiscal 2015 were flat compared to the first quarter of fiscal 2014, owing to new store growth at Justice and Maurices was offset by negative total combined comparable sales at Justice. The company reaffirms guidance for adjusted earnings per diluted share from continuing operations in the range of 0.90 dollar to 1 dollar for the fiscal year ending July 2015.

Gross margin for the first quarter of fiscal 2015 increased to 694.5 million dollars, or 58.2 percent of sales, compared to 693.2 million dollars, or 57.9 percent of first quarter sales last year. The gross margin rate improvement was driven by performance at Maurices, Dressbarn and Catherines, offset in part by lower gross margins at Lane Bryantand Justice.

Operating income for the first quarter was 66.1 million dollars, or 5.5 percent of sales, compared to 85.6 million dollars, or 7.2 percent of sales last year. On an adjusted basis, operating income was 75.6 million dollars, or 6.3 percent of sales compared to 93.8 million dollars, or 7.8 percent of first quarter sales last year. The company reported earnings from continuing operations and net income of 0.32 dollars per diluted share. For the prior year first quarter, the company reported earnings from continuing operations of 0.33 dollars per diluted share, a loss from discontinued operations of 0.01 dollar and net income of 0.32 dollars per diluted share.

Commenting on the results, David Jaffe, President and Chief Executive Officer of Ascena Retail Group, said, “We are pleased that we delivered the first quarter in line with our expectations. Conditions remain challenging as we transition into Holiday, and we will react appropriately to drive sales to ensure we end the season at targeted inventory levels. While we are watchful about the state of the market and continue to plan conservatively, we have a strong portfolio of brands that communicate value to their customers.”

The company continues to assume flat to modest positive total comp growth for the year, and it now sees total capital expenditures at the lower end of the 350 million dollars to 375 million dollars range provided with its full year guidance.

Ascena Retail Group