Ascena Retail reports losses in Q4 and FY15

Ascena Retail Group reported a loss from continuing operations of 1.98 dollars per diluted share for the fourth quarter of fiscal 2015 against 0.10 dollars per diluted share in the same period of fiscal 2014. Adjusted earnings from continuing operations were 0.06 dollar per diluted share, compared to 0.13 dollar per diluted share for the fourth quarter of fiscal 2014.

For the fiscal 2015, the company reported a loss from continuing operations of 1.46 dollars per diluted share against 0.84 dollar per diluted share in the same period of fiscal 2014. Adjusted earnings from continuing operations for the full year were 0.59 dollar per diluted share, compared to 1 dollar per diluted share in the prior year.

Omni-channel strategy to drive growth

”Results for the quarter were challenged by two large, non-operating expense hits related to a goodwill and trade name impairment at Lane Bryant and litigation activity at Justice. On the operating front, Justice had a difficult quarter as expected, and Dressbarn missed expectations due to assortment challenges. With all that said, we were pleased with fourth quarter performance at Maurices, Lane Bryant, and Catherines,” said David Jaffe, President and Chief Executive Officer of Ascena Retail Group.

Adding further, Jaffe said, “We are executing against controllable factors, mindful that traffic continues to be challenging. Our brands remain focused on strong merchandising execution, and disciplined inventory and expense management. We are making good progress toward the multi-year development of our enterprise omni-channel platform, which is a key element of our long-term growth plan. And with the acquisition of Ann Inc, our shared services group is aggressively working to capture the 150 million dollars of identified deal synergies.”

Fiscal year 2016 guidance

The company's guidance for adjusted earnings per diluted share from continuing operations for the fiscal year ending July 2016 is in the range of 0.75 dollar to 0.80 dollar. Top-line sales are expected to be in the range of 7.3 dollars to 7.4 billion dollars, Gross margin rate in the range of 55 percent to 55.5 percent, EBITDA in the range of 670 dollars to 700 million dollars, a flat to modest store count decline.

The company’s guidance reflects a contribution of 0.05 dollar to 0.10 dollar from the Ann Inc acquisition, inclusive of the impact of debt financing. Excluding the contribution from the acquisition, the company’s guidance reflects top-line sales in the range of 4.78 dollars to 4.84 billion dollars. Combined comp performance flat to up low-single digits, with modest negative combined comps in the fall accelerating into spring, gross margin rate improvement in the range of 200 to 250 basis points, mid-teen EBITDA growth. The company also continues to expect EPS accretion from the acquisition to accelerate to greater than 20 percent in fiscal 2017 and beyond as synergy capture progresses.