Ascena Profit Tops Estimate, But Sales Misses - Update

(RTTNews) - Apparel retailer Ascena Retail Group Inc (ASNA), Tuesday reported a higher third-quarter profit, helped mainly by some lower tax provision, even as improved sales and gross margin were offset by higher buying, distribution and other expenses. Ascena's quarterly earnings topped Wall Street estimates, but revenues missed expectations.

Moving forward, Ascena reaffirmed its adjusted earnings outlook for 2014. The company warned of soft business conditions, and to sort things out, is implementing promotional strategies and streamlining its inventory ahead of the Fall season.

Ascena's apparel targets women, and tween girls and boys. The company operates under segments such as Justice, Lane Bryant, maurices and Catherines.

The Suffern, New York-based company posted third-quarter net earnings of $33 million or $0.20 per share, compared with $31 million or $0.19 per share last year.

Excluding items, adjusted earnings for the quarter was $44.8 million or $0.27 per share, compared with $42 million or $0.26 per share a year ago.

On average, 13 analysts polled by Thomson Reuters expected earnings of $0.19 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the third quarter grew to $1.15 billion from $1.14 billion in the prior year. Analysts expected sales of $1.17 billion.

Ascena benefited from growth at its maurices and Lane Bryant segments.

On a same-store basis, sales for the quarter were down 1 percent.

Gross margin for the quarter increased to 58.9 percent from 57.6 percent a year ago, but operating margin declined 100 basis points.

Results were mainly helped by income tax provision that dropped to $15.7 million from $22 million last year.

For fiscal 2014, Ascena continues to project adjusted earnings of $1.00 to $1.05 per share. Analysts currently estimate earnings of $1.05 per share for the year.

The company expects same store sales to be up slightly, and plans to open 40 to 60 new stores.

Ascena stock closed Tuesday at $16.40, down $0.13 or 0.79%, on a volume of 2.4 million shares. In after hours, the stock dropped $0.10 or 0.61%.