Published
May 18, 2017
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Ascena reduces full year, Q3 guidance due to unexpected headwinds

Published
May 18, 2017

Ascena Retail Group on Wednesday updated its third quarter and fiscal year 2017 guidance to reflect “industry wide traffic headwinds and a highly promotional environment,” according to President and CEO David Jaffe.


Ascena Retail Group

 
The environment impacted Ascena’s expectations, led to the company missing its third quarter sales and earnings outlook, and contributed to impairment indicators that forced the company to test its goodwill and indefinite lived intangible assets. 

Jaffe added, “We have adjusted our second-half outlook to reflect this environment and limited near term visibility, and no longer believe it appropriate to expect a stabilization of traffic and resulting normalization of comp sales against softer demand in the year-ago period.”

The President and CEO believes that the operating conditions will continue to be challenging for the next 12 to 24 months, and that the company’s supply chain and distribution network will address those challenges.

Ascena has developed its supply chain and distribution network as part of its Change for Growth enterprise transformation program that is intended to make the company more agile. The initiative and expanded structural cost reduction scope are expected to deliver $250 to $300 million in cost savings compared to the previous $150 million target.
 
Jaffe said, “We are confident that our comprehensive enterprise transformation, our financial strength, and our highly capable operational platform will enable us to navigate this period of adjustment, and emerge in a position to compete effectively on a sustained basis as a true omni-channel retailer, supported by our mix of relevant owned brands and deep customer relationships.”
 
The company previously expected its full year non-GAAP earnings per share to range from $0.37 to $0.42 and its third quarter non-GAAP earnings per share to range from $0.07 to $0.12. The full year EPS is now expected to be between $0.10 and $0.15 for the year and $0.04 and $0.06 for the third quarter.
 
Ascena also adjusted its comparable sales guidance and expects to be down 8% in the third quarter and down 7% to 5% for the year.

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