Ascena Retail Profit Tops Estimates; Stock Up - Update

(RTTNews) - Specialty apparel retailer Ascena Retail Group Inc. (ASNA) Monday reported a higher first-quarter profit, helped by a five percent growth in sales and improved margins. Results for the quarter came in above Wall Street estimates.

Ascena reaffirmed its outlook for 2014 even as it cautioned about the challenging retail environment.

Shares of the company gained about 5 percent in after-hours trade on the Nasdaq.

"We were pleased that our top line momentum continued into the first quarter, with all of our brands generating positive total comps," said CEO David Jaffe. "We expect the retail environment to be challenging for the foreseeable future, with a highly promotional holiday season."

Ascena offers clothing, shoes, and accessories for missy and plus-size women under the Lane Bryant, Cacique, maurices, dressbarn and Catherines brands; and for tween girls and boys, under the Justice and Brothers brands.

The Suffern, New York-based company posted quarterly net income of $52.6 million or $0.32 per share, compared with $43 million or $0.27 per share last year.

Results for the recent quarter included acquisition-related charges of $3.45 million, while the prior year had inventory purchase accounting adjustments of $12.5 million.

Excluding items, adjusted earnings for the quarter were $59.5 million or $0.36 per share, compared with $63 million or $0.39 per share last year.

On average, 13 analysts polled by Thomson Reuters estimated earnings of $0.32 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 5 percent to about $1.20 billion from $1.14 billion in the prior year. Analysts expected sales of $1.18 billion.

Consolidated comparable store sales increased 2 percent for the quarter. Online sales were up 27 percent.

Results were also propped up by gross margin that expanded to 59.3 percent from 57.7 percent a year ago.

For fiscal year 2014, Ascena continues to expect adjusted earnings of $1.25 to $1.30 per share. Analysts estimate earnings of $1.30 per share.

Comparable sales for the year are expected to grow in the low single digits.

Ascena stock closed Monday at $20.87, down $0.43 or 2.02%, on a volume of 3.2 million shares. In after hours, the stock gained $0.95 or 4.55% at $21.83. In the past year, the share has traded in the range of $15.95 - $21.70.