Ascena Retail Group has ended its fiscal year on a sound note as it moved to a profit in the fourth quarter and booked higher margins on the back of improved sales.
Earnings in the three months ended 4 August amounted to US$33.2m from a net loss of $15.8m in the year-ago quarter. Gross margin improved ten basis points to 57.5% thanks to a 4% increase in comparable sales and around $50m associated with an additional week.
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Net sales were up 6.4% for the quarter to $1.77bn compared to $1.66bn in the prior year. All brands delivered positive comparables in the period.
CEO David Jaffe said: “We entered fiscal 2019 with good base momentum, and key growth initiatives beginning to gain traction across our brands. We are making headway with stabilisation of our dressbarn brand, and will continue to explore opportunities across our brand portfolio to create shareholder value.”
For fiscal 2019, the company is forecasting full-year non-GAAP earnings per share ranging from $0.00 to $0.10, supported by net sales of $6.45bn to $6.55bn, comparable sales up low single digits, and a gross margin rate of 57.6% to 58.1%.
Neil Saunders, managing director of GlobalData Retail, says Ascena has made some progress in the quarter but given the stronger consumer economy and higher spending on clothing, this is to be expected.
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By GlobalData“The question, therefore, is how much of this improvement is down to the changes Ascena has made and how much is the result of a more favourable external environment. The honest answer is that there is a very mixed picture across the various brands.”
He warns: “Ascena is in a better position than it was a year ago. However, it is still a group with far too many weak and insipid labels. It needs to replicate the thinking it has employed with Justice to the rest of the business and use this to create a much clearer and more compelling proposition across all of its brands.”
