Investing.com -- Shares in Ascena Retail Group Inc (NASDAQ:ASNA), the parent company of Lane Bryant, Dress Barn and Justice, plunged more than 7% in after-hours trading after the New Jersey-based retail giant cut its full-year profit guidance on Friday.
Ascena, which was founded in 1962 in Stamford, Connecticut, blamed lower than expected sales at its Justice and its Dress Barn divisions for the lower outlook. The company now expects full-year adjusted EBITDA from continuing operations in the range of $365 million to $375 million, and full-year adjusted earnings per diluted share of $0.57 to $0.60. Previously, Ascena offered a full-year guidance of 0.70-0.75 per share. Ascena also expects to suffer a $275-$325 million loss related to an impairment charge suffered by Lane Bryant and a $50 million loss related to a previously disclosed class action suit involving Justice.
“While we expected a challenging quarter at Justice due to the sell-down of Spring/Summer merchandise coupled with a significant reduction in promotional activity, our revised fourth quarter expectation incorporates a more complete exit from the existing season’s merchandise mix," Ascena CEO David Jaffe said in a statement. "After careful consideration, we have determined that an even more aggressive sell-down of Spring/Summer goods at Justice is prudent, and will result in a cleaner selling floor and a well-communicated value proposition for the Fall season."
"We expect our actions will enable a better start to fiscal year 2016 performance at Justice. We are excited to better align our product, pricing, and marketing initiatives, and expect ultimately to see a strong, sustainable improvement in store-level performance across the chain," Jaffe added.
In May, Ascena acquired the parent company of Ann Taylor and Loft for a reported $2.16 billion. Previously, Ascena shares had been up by 13% over the last three months.
On Friday, shares in Ascena fell 1.27 or 7.76% to 16.37.