Ascena Retail Group's Q2 net loss widens

business

Ascena Retail Group's Q2 net loss widens

business newsMarch 15, 2019by Prachi Singh

Ascena Retail Group, Inc. for its second quarter reported a net loss of 72 million dollars or 36 cents per diluted share compared to 39 million dollars or 20 cents per diluted share, in the year-ago period, as the company said, an increase in comparable sales was more than offset by the impact of a lower gross margin rate and a lower benefit related to income taxes. Adjusted loss for the quarter was 26 cents per diluted share compared to 12 cents per diluted share in the year-ago period.

Commenting on the second quarter trading, David Jaffe, Chairman and Chief Executive Officer of Ascena Retail Group, said in a statement: “While we were pleased with continued traction at the enterprise level, performance was again mixed across our portfolio. While we believe the challenging selling environment is the result of macro headwinds impacting our sector, our third quarter outlook represents an unacceptable profit shortfall to the expectations we shared at the beginning of our fiscal year."

Comparable sales up 2 percent at Ascena Retail Group

Net sales for the second quarter, the company said, were 1,693 million dollars compared to 1,719 million dollars in the year-ago period, with a 2 percent increase in comparable sales. The decrease in non-comparable sales was caused by the unfavourable impact of the 53rd week in the prior fiscal year, and fewer stores as a result of the company's ongoing fleet optimization program.

Gross margin decreased to 883 million dollars or 52.2 percent of sales compared to 929 million dollars or 54 percent of sales in the year-ago period. Operating loss was 52 million dollars compared to 36 million dollars in the year-ago period.

The company added that February performance was challenging, and that it is currently operating with reduced forward visibility on sales trends due to what it believes are temporary, macro-related factors. For its third quarter, the company currently expects a non-GAAP loss per share of 45 cents to 35 cents, net sales of 1.43 to 1.46 billion dollars; comparable sales of down 4 percent to down 2 percent and gross margin rate of 57 percent to 58 percent.

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