Ascena Loses 2% In 3 Days: Soft Holiday Season To Blame?

Ascena Retail Group, Inc. (NASDAQ:ASNA) declined nearly 2.4% since it came out with holiday sales results on Jan 8. The company failed to put up a stellar show this holiday season, which has, however, been a marvelous one for retailers like American Eagle Outfitters Inc. (NYSE:AEO) , Kohl's Corp. (NYSE:KSS) and Target Corp. (NYSE:TGT) .

Ascena’s consolidated comparable sales (comps) dipped 3% for the holiday period extending from Nov 18, 2017 through Jan 1, 2018.

A Brief Introspection

Ascena’s dismal comps performance stemmed from the negative comps witnessed at the company’s Plus Fashion, Premium Fashion, Value Fashion segments, somewhat offset by comps growth at the Kids Fashion (Justice) division.

Segment-wise, comps declined 2% at Plus Fashion, 3% at Premium Fashion and 9% at Value Fashion. On the contrary, the same increased 4% at Kids Fashion. Under the Plus Fashion division, Catherines brand reported comps decline of 7% while Lane Bryant delivered flat comps. At Premium Fashion segment, comps for LOFT and Ann Taylor brands fell 1% and 6%, respectively. Likewise, comps for Value Fashion’s maurices and dressbarn brands plunged 6% and 13%, respectively.

Moreover, enterprise comps dropped 3% so far in the quarter. Management stated that it is witnessing serious merchandising issues at the dressbarn brand, though it expects trend to improve with the advent of the spring season.

Furthermore, management reiterated its second-quarter fiscal 2018 loss per share guidance of 7-12 cents, excluding the possible effects of recent tax reform. The Zacks Consensus Estimate for the same quarter is currently pegged at a loss of 9 cents per share.

Stock’s Dismal Run on the Bourses

A look upon this Zacks Rank #4 (Sell) company’s share price performance in a year shows that it has plummeted 63%, significantly wider than the industry’s fall of 1.8%. This downtrend can be mainly attributable to the company’s dismal comps performance in the past few quarters, owing to fall in average selling price and sluggish store traffic.

Apparently, the company’s total comps dropped 5% in the first quarter of fiscal 2018. Also, it declined 4%, 8%, 4% and 5% in the fourth, third, second and first quarters of fiscal 2017, respectively.

In the first quarter of fiscal 2018, Ascena reported in-line earnings with lower-than-expected sales. Also, both the company’s top and bottom lines declined year over year. The results were hurt by fashion misses and soft execution of its merchandising initiatives.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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