US: Ascena Q2 profit drops as Justice dips
- Q2 net profit falls 14.3% to US$32.4m
- Net sales up 2% to $1.267bn
- Comparable sales flat
The retailer saw its sales rise by 2% in the second quarter
Ascena Retail Group has lowered its full-year earnings forecast after a second quarter in which net profit fell 14% thanks to a poor performance from the company’s Justice stores.
The US retailer’s 2% net sales increase in the three months to 25 January came about thanks to new stores opening, with comparable sales flat, and retail comps declining by 3% alongside a 28% increase in e-commerce revenues.
Among the company’s various retail brands, comps for Justice fell 5% and Maurices was down 1%.
Dressbarn was flat in comp terms, but Lane Bryant was up 8% and comps at Catherines rose 10%.
“Second quarter net income was slightly above our revised expectations, despite softer than expected sales in January, driven primarily by challenging weather that continued to negatively impact sales into early March,” said company president and CEO David Jaffe.
Ascena lowered its full-year forecast for adjusted diluted earnings per share to $1.00-1.05.
Analyst FBR Research said plans by Ascena Retail to increase its fashion penetration should begin to have an impact during the back-to-school period.
"We view this strategy as a positive as Justice's fashion products appear to sell better than basics. However, similar to the teen segment, we believe the tween segment is also price sensitive, and we believe strong promotions may still be required to drive sales."
An improved gross margin performance and higher sales helped boost earnings for US retailer Ascena Retail Group in its first-quarter....
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