Ascena Retail Group Inc (NASDAQ:ASNA)
Ascena Retail Group, Inc. ASNA, a clothing and accessories retail company yesterday reported their fiscal third quarter 2016 financial results. Ascena reported third quarter earnings of $0.15 per share which beat analyst expectations of $0.13 per share. Ascena reported revenues decreased 4.5% year over year to $1.67 billion which fell short of analyst expectations of $1.73 billion.
Ascena Retail Group, Inc. CEO’s Comments
David Jaffe, President and Chief Executive Officer of ascena retail group, inc., commented, “We continued to make progress in the third quarter with key catalysts in our business. The turnaround at Justice is progressing as planned, with improved performance versus last year driven by continued strength in gross margin rate. Our integration of ANN is progressing well, and we remain confident in our $235 million target for deal synergies and cost savings by the end of Fiscal 2018. I am especially pleased with the product-driven strength we have seen at LOFT, which was a bright spot in the quarter.”
Jaffe continued, “At the same time, the environment this Spring has been challenging. After the disruption of a warm holiday season, we’ve had to contend with an unseasonably cold spring and resulting elevated traffic headwinds. While I think we have managed the business well, particularly with respect to inventory levels, we were not able to fully mitigate these challenges. Our earnings exceeded the upper end of our guidance range for the third quarter, but I’ll note that performance benefited from some favorable expense timing that offset softer than expected top-line performance. These expenses will come back in the fourth quarter, and combined with the traffic challenges we’ve seen continue through May, we’ve adjusted our earnings outlook downward.”
Jaffe concluded, “We continue to focus on controlling the things we can control – delivering outstanding customer experiences in our stores and online to maximize our traffic opportunity, maintaining tight inventory and cost discipline, continuing the successful integration of ANN, and driving forward our strategic initiatives. Finally, as we continue to navigate the changing dynamics of our sector, we’re assessing our operating model to maximize the profit potential of our diversified brand portfolio and shared services platform, and build upon our ongoing synergy and growth initiatives. Earlier this month, we retained Accenture, a leading global professional services company with expertise in supporting business transformation, to proactively engage with us in an enterprise-wide transformation project. We’re excited about the opportunity this project represents for enterprise profitability, and will share more detail on this project later in the year after it is fully scoped.” Business Wire
ASNA Technical Analysis
ASNA opened trading yesterday at $7.18 which was up from the previous days trading of $7.14. ASNA closed trading yesterday at $7.22 and crashed down after market to $6.85, equivalent to a 5% decrease from the closing price. Taking a look at the daily chart we can see that the last time ASNA traded below this price level was on May 18th when it traded at $6.78. Taking a closer look at the daily chart we can see that ASNA has been on an overall downward trend dating back to March 31st when it traded at $11.06. ASNA has a float of 136.96 million shares and traded at 1.5 times the normal daily trading volume on Tuesday. For trading purposes, I would like to see ASNA open trading on Wednesday below $7.00 and if it does I would be looking to take a short position at the bell. My stop loss would be $0.15 from my entry position fearing anything more than that and the stock would start to fill in the gap down.
Company Profile
Ascena Retail Group, Inc., through its subsidiaries, operates as a specialty retailer of clothing, shoes, and accessories for missy, plus-size women, and tween girls in the United States, Canada, and Puerto Rico. The company operates through five segments: Justice, Lane Bryant, maurices, dressbarn, and Catherines. It creates, designs, and develops a range of merchandise, including apparel, accessories, footwear, and intimates; lifestyle products comprising bedroom furnishings and electronics; and wear-to-work, casual sportswear, footwear, and social occasion apparel. The company also offers career wear, dressy apparel, and active wear, as well as special occasion and classic apparel. Its principal retail brands comprise Ann Taylor, LOFT, Lou & Grey, Justice, Lane Bryant, Lane Bryant Outlet, Cacique, Right Fit, maurices, dressbarn, Catherines, Catherines Plus Sizes, Maggie Barnes, Liz&Me, Serenada, Dressbar, 6th & Lane and Maurices In Motion. As of September 16, 2015, the company operated approximately 4,900 stores. It also offers its products online. The company was formerly known as Dress Barn, Inc. and changed its name to Ascena Retail Group, Inc. in January 2011. Ascena Retail Group, Inc. was founded in 1962 and is headquartered in Mahwah, New Jersey.