Ascena Retail Group swings to Q1 profit but misses Street

Ascena Retail Group reported a profit in its first quarter on lower costs, but it missed Wall Street expectations.



The company, whose banners include Ann Taylor, Loft, Lane Bryant, Dress Barn and more, reported net income of $14 million, or $0.07 per diluted share, in the first quarter, compared to a net loss of $18 million last year, or $0.10 per diluted share. Ascena’s income for the first quarter reflected lower purchase accounting adjustments and acquisition and integration costs.



Net sales totaled $1.678 billion, also less than expected, compared to $1.672 billion in the year-ago period, which excluded roughly $122 million of Ann sales.



Same-store sales fell 5%.



In a statement, president and CEO David Jaffe noted that selling has picked up a bit “following a very difficult period leading to Election Day.”



“Total comp sales were up 2% for the nine day period from the weekend preceding Thanksgiving through Cyber Monday. Double-digit ecommerce growth over this period more than offset negative brick and mortar performance, which was caused by continued traffic headwinds,” he said.



But Jaffe warned that market conditions are challenging and are likely to remain so.



“We are focused on the areas of the business that we can control,” he said. “We expect to drive down inventory levels, execute cost controls, and build a more flexible and responsive organization in general. While these actions will support our near-term performance, we will also continue to aggressively work on our enterprise transformation to create sustainable performance for the longer term through enhanced customer facing capabilities. The tough environment certainly highlights the necessity of the transformation we are executing, and we are working to ensure that Ascena emerges as a strong competitor that can simultaneously drive value to a demanding customer and produce the returns expected by our shareholders."