Ascena Retail Profit Tops Estimates, Lifts FY Outlook; Stock Up - Update

(RTTNews) - Specialty apparel retailer Ascena Retail Group Inc. (ASNA), Tuesday reported a better-than-expected jump in fourth-quarter profit, helped by the 2012 acquisition of the Lane Bryant and Catherines businesses as well as better margins. Looking ahead, the company lifted its earnings outlook for 2014.

CEO David Jaffe believes the company is on track to meet its long range synergy targets despite macroeconomic conditions impacting the apparel industry.

The results cheered investors and Ascena shares gained over 9 percent in after-hours trading on the Nasdaq.

Ascena offers clothing, shoes, and accessories for missy and plus-size women as well as for tween girls and boys.

The Suffern, New York based company's quarterly net income surged to $30 million or $0.18 per share from $1.6 million or $0.01 per share last year.

Results for the quarter included acquisition-related costs of $9 million, while the prior year had acquisition-related charges of $21 million, among other items.

Excluding items, adjusted earnings from continuing operations for the quarter were $0.34 per share, compared with a $0.29 per share a year ago.

On average, 13 analysts polled by Thomson Reuters expected earnings of $0.21 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter grew 27 percent to $1.2 billion from $940 million a year ago. Analysts expected sales of $1.17 billion for the quarter.

Results reflect the inclusion of a full quarter of the Lane Bryant and Catherines businesses, as well as comparable sales increase of 4 percent.

Gross margin for the quarter climbed to 56.1 percent from 53.4 percent last year, due to reduced markdown requirements.

For the fiscal year, the company now expect adjusted earnings of $1.25 to $1.30 per share, from its prior range of $1.10 to $1.15 per share. Analysts currently expect earnings of $1.12 per share for the year.

The company plans to open 180 to 190 stores and close 115 to 125 stores, ending the fiscal year with about 3,925 stores.

Ascena stock closed Tuesday at $17.32, down $0.29 or 1.65%, on a volume of 2.8 million shares. In after hours, the stock gained $1.93 or 11.14% at $19.25.