Ascena's comparable store sales increase 6%

26 May '11

6 min read

Net sales for the nine month period ended April 30, 2011 increased 32% to $2.19 billion, compared to $1.66 billion for last year's nine month period ended April 24, 2010. The increase was primarily due to strong sales performance at maurices and Justice, including the effect of accounting for a full period of Justice's sales compared to a partial period in the prior year due to the merger closing on November 25, 2009. Comparable store sales increased 6%.

For the nine month period by division: net sales for dressbarn increased 1% to $707.2 million with comparable store sales increasing 1%. Net sales for maurices increased 19% to $593.5 million with comparable store sales increasing 12%. Net sales for Justice were $887.5 million with comparable store sales increasing 6% during this period.

SG&A expenses for the nine month period were $635.6 million, or 29.0% of sales, compared to $480.4 million, or 28.9% of sales in the prior year's nine month period. SG&A expenses on a non-GAAP basis were $623.9 million, or 28.5% of sales, compared to $469.5 million, or 28.2% of sales in the prior nine month period. The increase in the SG&A rate of 10 basis points on a GAAP basis and 30 basis points on a non-GAAP basis was due to ongoing costs for the Company's investment in several key integration projects, increases in marketing spend, and an increase in the provision for incentive compensation relating to better-than-expected operating performance.

Operating income for the nine month period was $235.7 million, or 10.8% of sales, compared to $157.6 million, or 9.5% of sales in the prior year's nine month period. On a non-GAAP basis, operating income increased to $248.4 million, or 11.4% of sales, compared to $168.5 million, or 10.1% of sales in the prior fiscal year. This increase as a percentage of sales is mainly due to improved gross profit.

Commentary

David R. Jaffe, President and Chief Executive Officer of Ascena Retail Group, Inc., commented, "We are very pleased to report solid gains in both sales and earnings. In each of our concepts, we have focused on providing a compelling value proposition to consumers, the success of which is reflected by our continued, across-the-board comparable store sales increases. As we go forward, we are mindful that today's consumer is under increasing pressure, and we are working hard to ensure that we retain our leadership position for both fashion and value within each of our brands. We are confident that we have struck the right balance of merchandise and pricing and will continue to do so."

Mr. Jaffe continued, "Our new corporate organizational structure is providing us the opportunity to retain the special qualities that have brought each of our brands to prominence and to share best practices across all of our businesses. We remain focused on evaluating a variety of strategies to further utilize our strong balance sheet and our operating infrastructure to drive enhanced returns and value to our shareholders."

Fiscal July 2011 Earnings Guidance

The Company has reaffirmed its earnings guidance per diluted share for the fiscal year ending July 2011 in the range of $2.28 to $2.33. This estimate is based upon various assumptions for the year, including a mid-single digit increase in comparable store sales for the remainder of the fiscal year. The Company plans to end fiscal 2011 with a total of approximately 2,500 dressbarn, maurices and Justice stores.

Ascena Retail Group Inc

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