• US women's wear retailer  Ascena Retail Group has widened its net loss in the second quarter.
  • Q2 net loss totalled US$39.3m, compared to $35.2m a year earlier.
  • Net sales dropped 2% to $1.72bn compared to $1.75bn last year.

Shares in Ascena Retail Group were down more than 12% in after-hours trading on Monday (5 March) as the US women's wear retailer widened its net loss in its second-quarter.

For the period ended 27 January, net loss amounted to US$39.3m, compared to $35.2m a year earlier, while non-GAAP adjusted loss of $0.12 per diluted share compared to $0.07 in the year-ago period. Gross margin narrowed slightly to 54% from 54.1% last year.

Net sales, meanwhile, dropped 2% to $1.72bn compared to $1.75bn last year. The firm said the fall was primarily attributable to a 2% comparable sales decline that resulted from merchandise strategy challenges and store traffic declines at its value fashion segment and assortment misses at the premium fashion segment, partially offset by high single-digit comparative sales growth in kids fashion. Net sales for the second quarter included about $25m associated with the extra week in the period.

"Our second-quarter adjusted loss of 12 cents per share came in at the lower end of our guide," said CEO David Jaffe. "An improvement in top-line trend was offset by margin rate pressure primarily related to the final clearance of non-performing product categories at our value fashion and premium fashion segments that carried over from the first quarter."

Jaffe added the quarter marks the mid-point of the company's three-year Change for Growth enterprise transformation programme on which it continues to make "good progress" across all three pillars of the initiative.

"We remain on track to achieve $300m in cost savings by July 2019, and we are confident we will take this number higher as we move into the later stages of our transformation," he said.

Looking to the third quarter, the group expects net sales in the range of $1.48bn-$1.52bn and comparable sales to be down by between 3% and 5%.

FBR & Co analyst Susan Anderson, notes: "We believe there is significant low-hanging-fruit at Ascena 's better formats in the premium, plus, and kids segments, but poor performance in the value segment is weighing on results. As a result, we remain on the sidelines until we see a consistent turn in same-store sales and margins."