Ascena swings to surprise Q1 profit
Mahwah, New Jersey-based Ascena Retail Group, Inc. reported net income of $32 million, or $0.16 per diluted share, for the first quarter ended November 2, 2019 on Monday, as its cost reduction initiatives made up for declining sales.
The specialized womenswear retail group’s bottom line was a significant improvement from the net loss of $24 million, or $0.12 per diluted share, reported by the company in the prior-year period.
This progress was achieved despite a decrease of 3.1% in Ascena’s net sales in the first quarter, when they totaled $1.30 billion, down from $1.34 billion in the same period in the previous year.
Comparable sales slipped 2% in the company’s premium fashion segment, which includes the Ann Taylor and Loft brands, and 6% in the kids fashion segment, home to the Justice banner.
In the plus size segment, comps rose 1%, as a 5% decrease at Catherines was offset by a 2% increase at Lane Bryant.
Dressbarn, the only brand remaining in Ascena’s value segment since the company’s sale of the Maurices label earlier his year, saw a 10% rise.
Disregarding this rise at Dressbarn, whose wind-down Ascena expects to complete in December, company-wide comparable sales fell 2%.
Nonetheless, the company managed to reduce its selling, general, and administrative expenses by 9% to $397 million, or 30.6% of sales, during the quarter, compared to $436 million, or 32.6% of sales, in the year-ago period.
“While we are encouraged by the progress we are making, we know there is more work to be done,” said Ascena CEO Gary Muto in a release. “We are moving our brands in the right direction by capitalizing on their distinct market leadership positions while maintaining our focus on optimizing our capital structure. The steps we are taking now set us up to provide consistent profitable performance and enhance shareholder value over the longer term.”
Following the announcement of the company’s better than expected results, shares in Ascena shot up 35% in premarket trading on Tuesday.
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