Ascena Retail posts 8% rise in Q3 FY'12 sales

01 Jun '12

5 min read

Ascena Retail Group Inc. reported financial results for its fiscal third quarter and nine months ended April 28, 2012.

Fiscal Third Quarter Results
Net income for the third quarter of Fiscal 2012 was $49.4 million, representing a slight decrease to the year-ago quarter's net income of $51.8 million. Earnings per share for the third quarter of Fiscal 2012 decreased slightly to $0.31 per diluted share, compared to $0.32 of earnings per diluted share for the third quarter of Fiscal 2011.

The decrease in net income and earnings per share for the third quarter of Fiscal 2012 was entirely attributable to the incurrence of $6.8 million, or $0.03 per diluted share, of costs relating to the pending acquisition of Charming Shoppes, Inc.

Net sales for the third quarter of Fiscal 2012 increased 8% to $783.3 million, compared to $722.8 million for last year's third quarter. This was primarily due to a 5% increase in comparable store sales, and strong growth in sales from new stores and e-commerce. Consolidated comparable store sales include stores open for at least one year and do not include e-commerce sales results.

The Company was pleased to note that e-commerce sales increased 55% to $36 million versus last year's comparable period.

Selling, general and administrative (“SG&A”) expenses for the third quarter of Fiscal 2012 were $229.0 million, or 29.2% of sales, compared to $210.5 million, or 29.1% of sales last year. The marginal increase in SG&A expenses as a percent of sale was related to an increase in stock-based compensation costs.

Operating income for the third quarter of Fiscal 2012 decreased slightly to $85.3 million, or 10.9% of sales, compared to $86.4 million, or 12.0% of sales last year. The 110 basis point decrease in operating income as a percent of sales was due to a combination of a decrease in merchandise margin due to higher promotional markdowns, as well as the impact of higher SG&A expenses.

Fiscal Nine Month Results
Net income for the first nine-month period of Fiscal 2012 increased by 13% to $160.6 million; compared to net income of $142.3 million for the first nine months of Fiscal 2011.

Earnings per share for the first nine-month period of Fiscal 2012 increased by 15% to $1.01 per diluted share, compared to $0.88 of earnings per diluted share for the first nine months of Fiscal 2011. This growth in net income and earnings per share for the first nine months of Fiscal 2012 was partially offset by the incurrence of the above-mentioned $6.8 million, or $0.03 per diluted share, of costs relating to the pending Charming Shoppes acquisition.

Net sales for the first nine-month period of Fiscal 2012 increased 10% to $2.4 billion, compared to $2.2 billion for last year's first nine months. The overall increase was primarily due to a 6% comparable store sales increase, and strong growth in sales from new stores and e-commerce. E-commerce sales increased 55% to $121 million versus last year.

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