Ascena Retail Q3 Profit Down Higher Costs

(RTTNews) - Clothing retailer Ascena Retail Group Inc. (ASNA), Tuesday reported a drop in profit for the third quarter, hurt largely by higher operating costs that offset a mediocre revenue growth and stronger margins. Both earnings and revenues for the quarter fell short of Wall Street estimates.

Suffern, New York-based Ascena's third-quarter profit dropped to $24.4 million or $0.15 per share from $33.2 million or $0.20 per share last year.

Excluding one-time items, adjusted earnings for the quarter declined to $0.18 per share from $0.27 per share a year ago. On average, 11 analysts polled by Thomson Reuters estimated earnings of $0.20 per share for the quarter. Analysts' estimates typically exclude special items.

Ascena's revenues for the quarter grew 0.5 percent to $1.150 billion from last year's $1.145 billion. Analysts had a consensus revenue estimate of $1.16 billion for the quarter.

Combined comparable sales for the quarter declined 1 percent, while gross margin increased to 58.7 from 57.4 percent last year. Ascena's apparel targets women, and tween girls and boys. The company operates under segments such as Justice, Lane Bryant, maurices and Catherines.

Chief Executive David Jaffe said, "Looking back on the third quarter, we saw strong performance at Lane Bryant, maurices, and Catherines, and are excited about the major marketing initiatives that were launched this quarter at Lane Bryant and dressbarn."

Buying, distribution and occupancy expenses were 18.6 percent of sales, compared to 18.1 percent last year, largely due to higher store occupancy costs, and increased merchandising and design capability at maurices and dressbarn. Selling, general and administrative expenses increased to 31.7 percent of sales from 29.3 percent of sales last year.

Looking forward to the full year 2015, the company continues to expect adjusted earnings of $0.70 to $0.75 per share. Analysts currently expect $0.71 per share for the full year.

ASNA closed Tuesday's trading at $14.58, down $0.09 or 0.61%, on the Nasdaq. The stock further dropped $0.00 or 0.01% in the after-hours trading.