NEW YORK (TheStreet) - Shares of Ascena Retail Group's (ASNA) hit a 52-week-low on Tuesday following the company's disappointing fourth-quarter results as well as a cautious outlook for its fiscal 2015.
The Mahwah, N.J.-based parent company of plus-sized retailer Lane Bryant and dressbarn as well as owner of tween store, Justice, among other brands in its portfolio, reported quarterly net earnings of 10 cents a share for the July-ending quarter, down from 18 cents a share a year earlier. Adjusted earnings from continuing operations were 13 cents a share compared to 34 cents a share in the year-ago quarter. Analysts had expected earnings of 37 cents a share on revenue of $1.25 billion.
Ascena's net sales for the quarter slipped 1% to $1.18 billion led by "challenging tween market conditions" at Justice and inventory-related issues at Lane Bryant, "partially offset by positive comp growth at maurices and Catherines and new store growth at maurices," the company said in a statement. For fiscal 2015, Ascena forecast full-year earnings of 90 cents to $1 a share. Earnings are based on total comp growth of "flat to modest positive" for the year vs. estimates of $1.05 a share, according to Thomson Reuters.
"We have yet to see sustained evidence of market improvement, and as a result, are maintaining a conservative outlook as we enter the Fall season," Ascena CEO David Jaffe said in the company's earnings statement. "Fiscal 2015 will see the continuation of a critical, multi-year investment to build out our omnichannel platform. We continue to create a business model that will drive sustainable long term value for our shareholders."
At last check, Ascena's stock traded down 17% to $13.75, with more than 7 million shares changing hands, more than 8 times the three-month daily trading volume of 917,000 shares.
Following the results, analysts were largely negative. Here's what a few of them had to say:
Edward Yruma, KeyBanc Capital Markets (Hold)
Justice has yet to stabilize and trends remain difficult across most of the portfolio; Ascena's infrastructure may serve it well long term, but a tepid top line remains problematic. Challenges at the Justice banner continued (EBITDA at the division fell from $32.7 million in 4Q13 to an adjusted $0.5 million in 4Q14) and Lane Bryant's turnaround efforts may have stalled. But more importantly, we found the weakening consumer response to traditional promotional activity concerning, especially given the high level of dependence retailers have placed on promotions to drive traffic. We expect issues at Justice and Lane Bryant to continue to pressure results into 2015. There were some bright spots this quarter: comps at dressbarn and Catherine's both showed improvement, and maurices posted another positive quarterly comp. The company reported 4Q14 EPS of $0.13, well below the consensus estimate of $0.18 and our estimate of $0.19, due largely to weaker top-line trends and greater than expected margin contraction. We are lowering our 2015 EPS estimate to $0.95 from $1.14, consistent with management's initial 2015 guidance range of $0.90-$1.00, to reflect ongoing sales and margin pressure. Near-term headwinds and a 17.0x P/E on our 2015 calendarized EPS vs. 15.2x P/E for the specialty retail group leave us sidelined.