Ann Taylor, Loft lift Ascena Retail holiday sales, but guidance disappoints

1/14/2019
The parent company of Ann Taylor, Lane Bryant and other apparel brands is expecting a bigger-than-expected loss in its second quarter, weighed down by sluggish sales in its kids’ and plus-fashion businesses.

Ascena Retail Group Inc. now expects a loss of 23 to 28 cents per share in the second quarter. The company previously provided second-quarter guidance of a loss of 25 cents to 15 cents.

Ascena reported a 3% increase in sales for the holiday period, led by a 12% increase at its premium fashion segment, which consists of Ann Taylor and Loft. Same-store sales rose 2% in its value fashion division (Maurices and Dressbarn). But same-store sales fell 8% in the plus fashion segment (Lane Bryant and Catherines) and 1% in kids fashion (Justice.)

“We are pleased to have delivered enterprise comp sales and margin growth over the holiday period, although we continue to strive for more balanced performance across our brands,” said David Jaffe, CEO. “Momentum continued at Loft and Ann Taylor, with strong product acceptance across both brands driving double digit comp sales and margin growth at our premium segment.

Jaffe said the company’s positive developments were offset by performance at its kids and plus segments.

“At our Kids segment, Justice store traffic slowed as we moved through the holiday period, requiring aggressive clearance activity to address its highly seasonal specialty assortment prior to Christmas,” he said. “And at our Plus segment, we have made substantive changes to the Lane Bryant apparel assortment to address fashion missteps from our prior quarter, and believe we will be better positioned as we move into spring.”

Elevated clearance activity at Ascena’s Plus and Kids segments have pressured gross margin rate, Jaffe added, and as a result, “we now expect a loss of 23 to 28 cents per share for the quarter. We are pleased with top-line trends coming out of holiday, and remain focused on building upon this momentum as we head into the spring season.”

Ascena retail group operates e-commerce websites and approximately 4,600 stores throughout the United States, Canada and Puerto Rico.
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