• Q1 loss of $18.1m versus $53.5m profit 
  • Sales jump 40% to $1.67bn
  • Analyst upbeat about company 

US fashion retailer Ascena Retail Group recorded a mixed first-quarter performance, swinging to a net loss, while sales jumped. 

The company's net loss amounted to US$18.1m for the three months to 24 October, compared to a profit of $53.5m in the same period of the prior year. 

Net sales jumped 40% to $1.67bn from $1.19bn last year, helped by the acquisition of Ann Inc, which contributed $501.2m in sales. 

Ascena completes Ann Inc takeover

However, comparable sales fell 3%, weighed down by a 15% decline at Justice, a 5% drop at Dressbarn and a 1% fall at Catherines. Comparable store sales were up 4% at Lane Bryant and 7% at Maurices. 

Gross margin dropped to 53.6% from 58.2% a year ago, primarily due to the effect of the Ann Inc acquisition, which included an unfavourable, non-cash purchase accounting adjustment of $104m for the first quarter of fiscal 2016. 

Including Ann Inc's performance, gross margin improved to 59.8% from 57% a year ago. 

President and CEO David Jaffe said Ascena saw a mixed performance across its portfolio over the Black Friday/Cyber Monday period. 

But, he added: "Importantly, we were very pleased with the performance at Justice, which significantly exceeded our expectations during this critical peak period, delivering strong positive comp performance despite a reduced level of promotional activity." 

The company reaffirmed its full-year earnings per share guidance of $0.75- $0.80.

FBR & Co analyst Susan Anderson noted: "While we expect the top line to continue to be difficult across brands, given the competitive environment, we believe there is significant margin upside from synergies, cost savings, and Justice improvement."