Ascena Retail Group has updated its outlook for the full fiscal ended July 25, 2015 and has said that its adjusted earnings per diluted share will rise between 22 and 25 per cent over its previous outlook.
In a press release, Ascena added that full-fiscal adjusted earnings per diluted share from continuing operations will be in the range of $0.57-0.60 as compared to its prior expectation of $0.70-0.75 per share.
This has been done primarily to reflect its recent decision to accelerate its planned merchandise transition at Justice and to incorporate lower than expected top-line performance at Justice and Dressbarn.
It also said that in the fourth quarter it expects to take a non-cash, pre-tax goodwill and intangible asset impairment charge in the range of $275 million to $325 million related to Lane Bryant.
Additionally, it will also take a pre-tax charge of approximately $50 million to establish a reserve for the future settlement of the previously disclosed Justice class action litigation.
The apparel marketer now also expects full-fiscal adjusted EBITDA from continuing operations in the range of $365 million to $375 million.
CEO David Jaffe said, “We expected a challenging quarter at Justice due to the sell-down of Spring/Summer merchandise coupled with a significant reduction in promotional activity.”
“However, now our revised fourth quarter expectation incorporates a more complete exit from the existing season’s merchandise mix,” he too added.
“We have determined that an even more aggressive sell-down of Spring/Summer goods at Justice is prudent, and will result in a cleaner selling floor and a well-communicated value proposition for the Fall season,” Jaffe observed.
Jaffe also noted that they are excited to better align their product, pricing, and marketing initiatives, and expect ultimately to see a strong, sustainable improvement in store-level performance.
Jaffe concluded that while their financial results will be challenged by this transitional period at Justice and underperformance at dressbarn, the balance of our portfolio is performing consistent with its expectations.
