[ACCESSWIRE]
Upcoming AWS Coverage on Children's Place Post-Earnings Results
LONDON, UK / ACCESSWIRE / March 20, 2017 / Active Wall St. announces its post-earnings coverage on Ascena Retail Group, Inc. (NASDAQ: ASNA). The Company announced its second quarter fiscal 2017 results on March 06, 2017. The Company that owns Ann Taylor, Dress Barn, and Lane Bryant reported sales numbers that met market estimates. Register with us now for your free membership at:
http://www.activewallst.com/register/
One of Ascena Retail Group's competitors within the Apparel Stores space, The Children's Place, Inc. (NASDAQ: PLCE), reported on March 08, 2017, its financial results for the thirteen weeks and full year ended January 28, 2017. AWS will be initiating a research report on Children's Place in the coming days.
Today, AWS is promoting its earnings coverage on ASNA; touching on PLCE. Get our free coverage by signing up to:
http://www.activewallst.com/register/
Earnings Reviewed
For the quarter ended January 28, 2017, Ascena's net sales were $1.75 billion compared to $1.84 billion in the year-ago comparable period. Comp sales were down 4%, outpacing store traffic which was down 8%. The Company's negative comp performance reflects a 5% decline in store transactions and a 2% decline in average dollar sale, which was partially offset by double-digit growth in direct transactions. Direct penetration represented 23% of total sales for the reported quarter versus roughly 20% in the year earlier same period. The Company's revenue numbers met analysts' consensus of $1.75 billion.
For Q2 FY17, Ascena's gross margin on a GAAP basis decreased to $946 million, or 54.1% of sales, compared to $968 million, or 52.6% of sales in the year ago corresponding quarter. The prior year's gross margin included an unfavorable, non-cash purchase accounting adjustment of approximately $23 million associated with the write-up of ANN's inventory to fair market value, which negatively impacted gross margin rate by approximately 120 basis points. The remainder of the increase in margin rate reflects increases at the Company's Premium Fashion and Plus Fashion segments, which resulted from improved inventory productivity, promotional offer refinement, realization of ANN's deal synergies, and product cost favorability resulting from the cost of goods sold initiative at its Premium Fashion segment.
Ascena's buying, distribution, and occupancy ("BD&O") expenses on a GAAP basis for Q2 FY17 were $320 million, or 18.3% of sales, compared to $330 million, or 17.9% of sales, in Q2 FY16. BD&O expenses as a percent of net sales de-levered as occupancy cost reductions from ongoing fleet optimization and synergy savings achieved in the reported quarter were more than offset by the impact of declining comparable sales volume.
Ascena incurred an operating loss on a GAAP basis of $45 million, or 2.6% of sales, for Q2 FY17 compared to an operating loss of $17 million, or 0.9% of sales, in Q2 FY16. The higher operating loss in the current year primarily reflects the decline in gross margin dollars at the Company's Value Fashion and Kids Fashion segments.
For Q2 FY17, Ascena reported a net loss of $35 million, or $0.18 per diluted share, compared to a net loss of $23 million last year, or $0.12 per diluted share. Adjusted for one-time gain and costs, the Company reported loss of $0.07 per share, which was better than the market estimates for a loss of $0.10 per share.
Balance Sheet Highlights
Ascena ended Q2 FY17 with cash and cash equivalents of $300 million; of this amount, approximately $228 million was held outside of the US. The Company ended the reported quarter with inventory of $676 million, up 2% from $660 million at the end of the year ago period and included approximately $20 million in early receipts related to a shift in timing of the Chinese New Year holiday compared to the year ago same period. Ascena's Capital expenditures totaled $48 million in the second quarter of FY17. The Company ended Q2 FY17 with total debt of $1.597 billion, which represents the remaining balance on its $1.8 billion term loan used to acquire ANN.
Outlook
Excluding restructuring, acquisition, and integration related expenses, and non-cash ANN purchase accounting adjustments, Ascena expects non-GAAP EPS of $0.07 to $0.12 during Q3 FY17 and continues to expect full year FY17 non-GAAP EPS in the range of $0.37 to $0.42.
Stock Performance
At the close of trading session on Friday, March 17, 2017, Ascena Retail Group's stock finished the day flat at $4.17. A total volume of 5.46 million shares were exchanged during the session, which was above the 3-month average volume of 3.50 million shares. Shares of the company have a PE ratio of 101.71. The stock currently has a market cap of $812.90 million.
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