Why Ascena Retail Shares Dropped

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What: Shares of Ascena Retail Group were down as much as 11% today after the clothing retailer posted disappointing results in its third-quarter earnings report.

So what: The parent of Lane Bryant and other brands said that net income dropped 37%, to $31.2 million, or $0.26 a share, after adjustments. Analysts had expected an EPS of $0.31. The drop in profits came in spite of a 46% increase in revenue to $1.14 billion, due to last year's acquisitions of the Lane Bryant and Catherines brand. Still,a same-store sales decline of 4% was evidence of the weakness in the quarter. Ascena also lowered its full-year forecast, saying it now expects EPS for the year at $1.10-$1.20, against former projections of $1.20-$1.30. The analyst consensus had been at $1.26.

Now what: It's hard to put a silver lining on this report, as it was pretty much an all-around stinker, with an earnings miss, same-store sales decline, and a guidance cut. CEO David Jaffe said that bad weather and poor merchandise choices at Lane Bryant and dressbarn hurt the company during the quarter, but that sales have improved so far in the current period, as Ascena seems to have to put those mistakes behind it. The current quarter's report should let investors know if these problems are a continuing trend, or just one bad quarter.

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The article Why Ascena Retail Shares Dropped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Ascena Retail Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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