Earnings Review and Free Research Report: Ascena Reported Better than Expected Quarterly Sales Results

Research Desk Line-up: Destination Maternity Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 28, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Ascena Retail Group, Inc. (NASDAQ: ASNA), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=ASNA, following the Company’s posting of its third quarter fiscal 2017 financial results on June 08, 2017. The parent of Ann Taylor and Loft stores reported a y-o-y decline in sales and earnings. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at: http://protraderdaily.com/register/.

Get more of our free earnings reports coverage from other constituents of the Apparel Stores industry. Pro-TD has currently selected Destination Maternity Corporation (NASDAQ: DEST) for due-diligence and potential coverage as the Company announced on June 08, 2017, its financial results for Q1 FY17 which ended on April 29, 2017. Register for a free membership today, and be among the early birds that get access to our report on Destination Maternity when we publish it.

At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on ASNA; also brushing on DEST. With the links below you can directly download the report of your stock of interest free of charge at:

http://protraderdaily.com/optin/?symbol=ASNA

http://protraderdaily.com/optin/?symbol=DEST

Earnings Reviewed

For its fiscal third quarter ended April 29, 2017, Ascena’s net sales on a GAAP basis were $1.57 billion compared to $1.67 billion in Q3 FY16. The decrease in sales reflected the impact of the 8% comparable sales decline, primarily attributed to store traffic, which was down high single digits to low double digits across the Premium Fashion, Value Fashion, and Plus Fashion segments. The Company’s revenue numbers were ahead of analysts’ expectations of $1.56 billion.

For Q3 FY17, Ascena’s gross margin on a GAAP basis decreased to $948 million, or 60.6% of sales, compared to $1.02 billion, or 60.9% of sales, in Q3 FY16. The decrease in gross margin rate was primarily due to pricing challenges at the Company’s Kids Fashion segment, which realized a 400-basis point decline related to clearance of two major fashion drops. Ascena’s Value Fashion segment experienced a 160-basis point decline related to a higher level of promotional selling and increased markdown requirements, partially offset by improved economics related to the segment’s new credit card program.

Ascena’s buying, distribution, and occupancy (“BD&O”) expenses on a GAAP basis for Q3 FY17 declined 4% to $313 million, or 20.0% of sales, compared to $325 million, or 19.5% of sales, in Q3 FY16. The decline is BD&O expenses were attributed to lower occupancy expenses, lower performance-based compensation, and approximately $10 million in transformation savings and synergies. BD&O expenses as a percentage of net sales increased primarily due to the deleveraging effect of lower comparable sales.

For Q3 FY17, selling, general, and administrative (“SG&A”) expenses declined 5% to $506 million, or 32.3% of sales, compared to $536 million, or 32.1% of sales, in the year-ago corresponding period. SG&A expenses as a percentage of net sales increased primarily due to the deleveraging effect of lower comparable sales. Ascena’s operating loss for Q3 FY17 was $1.31 billion compared to operating income of $57 million in Q3 FY16.

Ascena reported a net loss of $1.03 billion, or $5.29 per diluted share, in Q3 FY17 compared to net income of $15 million, or $0.08 per diluted share, in Q3 FY16. The loss in the reported quarter included a non-cash pre-tax impairment charge of $1.32 billion to write-down a portion of the Company’s goodwill and other intangible assets. Ascena’s adjusted earnings totaled $0.05 per share but fell short of Wall Street’s expectations of $0.06 per share.

Balance Sheet Highlights

Ascena ended Q3 FY17 with cash and cash equivalents of $300 million. Of this amount, approximately $251 million was held outside of the US. The Company ended the reported quarter with inventory of $714 million, down 3% from $739 million at the end of the year ago same period. Ascena’s capital expenditures in Q3 FY17 totaled $52 million. The Company ended the reported quarter with total debt of $1.67 billion, which consisted of $1.597 billion of the term loan used to acquire ANN and $73 million of borrowings outstanding under Ascena’s revolving credit facility.

Fourth Quarter and Fiscal Year 2017 Outlook

Ascena expects to incur a loss on a non-GAAP EPS basis of $0.06 to $0.01 during Q4 FY17 and projects FY17 non-GAAP EPS in the range of $0.10 to $0.15.

Stock Performance

At the close of trading session on Tuesday, June 27, 2017, Ascena Retail’s stock price jumped 9.74% to end the day at $2.14. A total volume of 3.96 million shares were exchanged during the session. The Company’s share price has surged 23.70% in the past one month. The stock currently has a market cap of $417.19 million.

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