• Q3 net loss of US$1.03bn
  • Gross margin narrows to 60.6%
  • Net sales slip 6%

US women's wear retailer Ascena Retail Group has maintained its full-year and fourth-quarter guidance, despite moving to a net loss of more than US$1bn in its third quarter.

In the three months ended 29 April, net losses amounted to US$1.03bn, compared to net income of $15m year earlier. The parent of Ann Taylor and Lane Bryant said the quarter included a pre-tax $1.3bn impairment charge and restructuring charges related to Ascena's Change for Growth programme.

Gross margin, meanwhile, narrowed slightly to 60.6% from 60.9%, primarily due to pricing challenges at the company's kids fashion segment, which realised a 400 basis point decline.

Net sales slipped 6% to $1.57bn from $1.67bn last year, reflecting the impact of an 8% comparable sales decline.

Meanwhile, as part of its Change for Growth transformation work, Ascena says it has amplified its development of cost efficiencies, and recently doubled the cost takeout target to a range of $250-$300m by fiscal 2019.

"We continue to move aggressively to navigate our current environment," said president and CEO David Jaffe. "As a result of a $300m, multi-year technology and infrastructure investment cycle, we have developed a highly efficient supply chain and foundational omni-channel platform that will enable us to respond to the fundamental changes in consumer behaviour that are disrupting our industry. 

"We are confident that our brand initiatives, enterprise transformation work, and capital structure will enable us to navigate this period of disruption, and emerge as a well-positioned, agile competitor." 

Consistent with its previously disclosed guidance, Ascena expects to incur a loss on a non-GAAP EPS basis of $0.06 to $0.01 during the fourth quarter of fiscal 2017, and expects full-year non-GAAP EPS in the range of $0.10 to $0.15.