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Ascena Retail Group, Inc. Reports Fourth Quarter And Fiscal Year 2012 Results

Selling, general and administrative (“SG&A”) expenses for the fourth quarter of Fiscal 2012 were $281.7 million, or 30.0% of sales, compared to $200.4 million, or 27.6% of sales last year on a reported basis. On an adjusted basis, SG&A increased 5% to $210.7 million, or 26.9% of sales.

Operating income for the fourth quarter of Fiscal 2012 decreased to $30.8 million, or 3.3% of sales, compared to $54.2 million, or 7.5% of sales last year on a reported basis. On an adjusted basis, operating income increased to $70.4 million, or 9.0% of sales. The increase in operating income as a percent of sales on an adjusted basis was due largely to the increase in gross margin.

Fiscal Full Year Results

On a reported basis, income from continuing operations for Fiscal 2012 was $171.8 million, representing an increase to last year’s income from continuing operations of $170.5 million. Earnings per share from continuing operations for Fiscal 2012 increased to $1.08 per diluted share, compared to $1.05 of earnings per diluted share from continuing operations for Fiscal 2011. Including the discontinued operations of the newly acquired Fashion Bug and Figi’s businesses, net income for Fiscal 2012 was $162.2 million and earnings per diluted share was $1.02.

On an adjusted basis, income from continuing operations for Fiscal 2012 was $213.8 million, representing an increase versus last year’s amount of $170.5 million on a reported basis. Adjusted earnings per share from continuing operations for Fiscal 2012 increased to $1.34 per diluted share, compared to $1.05 of earnings per diluted share on a reported basis for Fiscal 2011.

Net sales for the full year Fiscal 2012 increased 15% to $3.4 billion, compared to $2.9 billion last year on a reported basis. On an adjusted basis, net sales for Fiscal 2012 increased 10%. Such increase was due to a 5% comparable store sales increase, led by Justice at 8%, and strong growth in sales from new stores and e-commerce . E-commerce sales on an adjusted basis increased 54% to $160 million versus last year. The Company’s comparable store sales and net sales by brand for the full year were as follows:

Fiscal Year Sales (Unaudited)
    Net Sales (millions)
Comparable July 28,   July 30,
Store Sales 2012 2011
Justice 8 % $1,306.7 $1,150.0
Lane Bryant* 3 % 119.7 --
maurices 2 % 852.9 776.5
dressbarn 3 % 1,037.6 987.5
Catherines* 11 % 36.4 --
Total Company 5 % $3,353.3 $2,914.0
*Comparable store sales and net sales for Lane Bryant and Catherines include sales from the acquisition date of June 14, 2012 through the end of the fiscal period for all stores that were open in both that period and the comparative period in the prior year.
 

Gross margin for Fiscal 2012 increased to $1.9 billion, or 56.0% of sales, compared to $1.7 billion, or 56.7% of sales last year on a reported basis. On an adjusted basis, gross margin for Fiscal 2012 was $1.8 billion, or 56.6% of sales. Gross margin as a percent of sales on an adjusted basis declined slightly due largely to lower margins at dressbarn and maurices.

B&O expenses for Fiscal 2012 were $542.3 million, or 16.2% of sales, compared to $483.4 million, or 16.6% of sales last year on a reported basis. On an adjusted basis, B&O was $511.7 million, or 16.0% of sales. The 60 basis point improvement on an adjusted basis was primarily due to increased leverage on the higher sales volume.

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