The company that owns Ann Taylor and Loft on Wednesday sharply cut its financial projections amid a rough retail market, sending shares tumbling by a third.
which bought Ann Taylor in 2015 and also owns Lane Bryant and Dress Barn, released underwhelming preliminary results for its latest quarter Wednesday and said it planned additional cost savings. The company also said it would take a charge of an undetermined size related to goodwill, which often happens when the value of an acquired business declines.
No information was given on Ascena’s additional cost cuts, which would boost its projected savings to a range of $250 million to $300 million, from a previous goal of $150 million. The company had initially announced a cost-savings program in October.
Given performance so far, Chief Executive
said, company executives “no longer believe it appropriate to expect a stabilization of traffic and resulting normalization of comp sales” and that they expect current conditions to continue to affect the company’s brands over the next year or two.
Comparable sales, which is a closely watched metric that looks at online sales along with sales at stores open for at least a year, declined 8% in the most recent period, nearly double what analysts had projected, according to FactSet.
With one quarter left in its fiscal year, Ascena said it now expects comparable sales to decline 6% to 7% for the year, compared with analysts’ projected 3.8%. It would be the third consecutive year of declines.
Ascena also slashed its full-year adjusted profit outlook to between 10 cents and 15 cents a share, from an earlier range of 37 cents to 42 cents.
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