=Ascena Retail (ASNA) reported earnings Mon 25 Sept 2017 (a/h)

Ascena Retail Group beats by $0.08, beats on revs; guides Q1 (Oct) revs above estimates

• Reports Q4 (Jul) earnings of $0.05 per share, $0.08 better than the Capital IQ Consensus of ($0.03).
• Gross margin on a GAAP basis decreased to $951 million, or 57.4% of sales, for the fourth quarter of Fiscal 2017 compared to $1,041 million, or 57.5% of sales in the year-ago period.
• Comps are down 4% Y/Y company-wide. Notable comps by division (All comps below are y/y):
  • Maurices down by 8% 
  • Lane Bryant down 6% 
  • Catherines up 1% 
  • Ann Taylor down 2%
  • LOFT down 3 %
  • Justice down 6%
• Co issues upside guidance for Q1 (Oct), sees Q1 (Oct) revs of $1.58-1.62 vs. $1.56 bln two analyst estimate.
  • Co guides Comparable sales in the range of down 4% to down 5% and Gross margin rate in the range of 60.8% to 61.3% FY18
• FY18:
  • Gross margin rate in the range of 58.1% to 58.6%, including approximately $30 million of gross margin dollar improvement related to ANN deal synergies and cost savings
• "At this point in time, the Company is not issuing full year guidance for Fiscal 2018 earnings per share due to limited visibility to macro trends impacting sales."
• "Our fourth quarter adjusted earnings per share of five cents came in well above our guidance range, reflecting a modest easing of store traffic headwinds. To be clear, conditions remain challenging - store traffic was down mid-single digits for the quarter, and we are planning for this trend to continue for the foreseeable future. While comp sales performance was several points better than our guide, we were not pleased with the results, and we will not be satisfied until we deliver positive, sustained enterprise-level comp sales. As part of our transformation efforts, we are investing in leading edge planning and marketing capabilities to support top-line growth and improved margin, and we remain on track to deliver cost savings of $250 to $300 million."