Ascena Retail Group Inc (NASDAQ:ASNA) investors are having a rough day after the women’s apparel maker reported weak earnings guidance, lowering its Q3 adjusted EPS to $0.04-$0.06 (from $0.07-$0.12), and full-year adjusted EPS to $0.10-$0.15 (from $0.37-$0.42).
Ascena Retail shares reacted to the news, tumbling nearly 40% in Thursday’s trading session.
David Jaffe, President and CEO, commented, “Industry-wide traffic headwinds and a highly elevated promotional environment have persisted at levels significantly above our expectations, resulting in a miss to our third quarter sales and earnings outlook. We have adjusted our second-half outlook to reflect this environment and limited near term visibility, and no longer believe it appropriate to expect a stabilization of traffic and resulting normalization of comp sales against softer demand in the year-ago period.”
Jaffe continued, “The specialty retail sector is in a period of unprecedented secular change that is disruptive to traditional business models, and we believe operating conditions in our sector are likely to remain challenging for the next 12 to 24 months. After several years of meaningful investment, ascena has developed a highly capable supply chain and distribution network designed to address the fundamental changes in our sector. We are confident that our comprehensive enterprise transformation, our financial strength, and our highly capable operational platform will enable us to navigate this period of adjustment, and emerge in a position to compete effectively on a sustained basis as a true omni-channel retailer, supported by our mix of relevant owned brands and deep customer relationships.”
Jaffe concluded, “Implementation of our Change for Growth enterprise transformation program is well underway, and we are aggressively accelerating and amplifying our transformation to ensure we emerge from this period of industry disruption as a stronger, more agile company. We are in process with implementation of technology platforms to support sales and margin, and have begun execution of our fleet optimization program. These initiatives, along with an expanded structural cost reduction scope, are now expected to deliver $250 to $300 million in cost savings as compared to our prior $150 million target. We plan to provide a timeline and additional context regarding this increased target on our third quarter earnings call, scheduled for June 5th.”
(Original Source – please add link)Shares of Ascena Retail opened today at $1.8, up $0.01 or -0.55%. ASNA has a 1-year high of $9.12 and a 1-year low of $1.77. The stock’s 50-day moving average is $3.82 and its 200-day moving average is $5.08.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Brian Tunick and Todd Thomas have a yearly average loss of 2.1% and 11.9% respectively. Tunick has a success rate of 47% and is ranked #3865 out of 4561 analysts, while Thomas has a success rate of 29% and is ranked #4137.
Sentiment on the street is mostly neutral on ASNA stock. Out of 5 analysts who cover the stock, 4 suggest a Hold rating and one recommends to Sell the stock. The 12-month average price target assigned to the stock is $3.00, which implies an upside of 67% from current levels.
Ascena Retail Group, Inc. engages in the retail of women’s clothing, shoes, and accessories stores. It operates through the following segments: ANN, Justice, Lane Bryant, Maurices, Dressbarn and Catherines. The ANN segment offers modern feminine classics and versatile fashion choices, sold primarily under the Ann Taylor and LOFT brands. The Justice segment creates designs and develops its own exclusive Justice branded merchandise in-house. The Lane Bryant segment offers female customers in plus-sizes 12-32, including intimate apparel, wear-to-work and casual sportswear, accessories, select footwear and social occasion apparel. The Maurices segment is primarily sold under the following two product lines: Maurices and Studio Y. The Dressbarn segment offers moderate-to-better quality career and casual fashion to the working woman. The Catherines segment offers classic apparel and accessories to female customers for wear-to-work and casual lifestyles.