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Ascena Retail Group, Inc. Reports Third Quarter 2014 Results

Stocks in this article: ASNA

Ascena Retail Group, Inc. (NASDAQ – ASNA) (the “Company”) today reported financial results for its fiscal third quarter ended April 26, 2014.

For the third quarter of Fiscal 2014, earnings from continuing operations were $0.22 per diluted share. This compares to earnings from continuing operations of $0.20 per diluted share in the same period of Fiscal 2013. Adjusted earnings from continuing operations in the third quarter of Fiscal 2014 were $0.27 per diluted share, compared to $0.26 per diluted share in the prior year’s third quarter. Growth in diluted earnings per share came from improved gross margin rate performance, which was mostly offset by increases in Buying, Distribution and Occupancy (“BD&O”) costs and Selling, General and Administrative (“SG&A”) expenses. Reference should be made to Note 2 in the accompanying unaudited consolidated financial information for a discussion of the use of “Non-GAAP Financial Measures.”

David Jaffe, President and Chief Executive Officer of Ascena Retail Group, Inc., commented, “Third quarter EPS was above our expectations and slightly above last year primarily due to lower than anticipated SG&A and tax expense. Q3 sales were challenging, and that trend continued into the start of Q4. As a result, we are implementing promotional strategies and receipt flow adjustments to ensure our inventories are conservatively positioned for the Fall season.”

Jaffe further commented, “We continue to make good progress on our longer range strategic priorities. Four of our five brands are now operating in our retail distribution center in Ohio, and we expect all brands to be operating out of that DC by Fall, on schedule. In addition, our new e-commerce fulfillment center opened in the third quarter and we are on track to migrate all brands into operations in that facility by Spring of calendar 2015.”

About Ascena Retail Group, Inc.

Ascena Retail Group, Inc. (NASDAQ: ASNA) is a leading specialty retailer offering clothing, shoes, and accessories for missy and plus-size women under the Lane Bryant, Cacique, maurices, dressbarn and Catherines brands; and for tween girls and boys, under the Justice and Brothers brands. Ascena Retail Group, Inc. operates through its subsidiaries approximately 3,900 stores throughout the United States, Puerto Rico and Canada.

For more information about Ascena Retail Group, Inc. and its brands, visit www.ascenaretail.com, www.lanebryant.com, www.maurices.com, www.dressbarn.com, www.catherines.com, www.cacique.com , www.shopjustice.com, and www.shopbrothers.com.

Fiscal Third Quarter Results

Net sales for the third quarter of Fiscal 2014 increased 0.3% to $1.145 billion, compared to $1.142 billion in the third quarter of Fiscal 2013. This increase was driven by new store growth at Justice and maurices, along with higher comparable sales at Lane Bryant, maurices and Catherines, mostly offset by comparable sales declines at Justice and dressbarn.

The Company’s comparable sales data for the fiscal third quarter is summarized below:

         
ascena store comparable sales (3%)
ascena e-commerce comparable sales 19%
 
Total Net Sales (millions)

Comparable Sales

April 26, 2014

April 27, 2013

Justice (4%) $291.7 $298.0
Lane Bryant 1% 269.3 267.2
maurices 2% 251.7 235.7
dressbarn (4%) 246.7 257.3
Catherines 4% 85.7 84.0
Total Company (1%) $1,145.1 $1,142.2
 

Gross margin for the third quarter of Fiscal 2014 increased to $675.0 million, or 58.9% of sales, compared to $657.8 million, or 57.6% of third quarter sales last year. The gross margin rate increase was primarily due to a lower level of markdown activity across most of our brands.

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