Ascena Retail Group Inc. (ASNA) Monday reported a drop in second-quarter profit, as a significant growth in revenues were offset by higher costs. Shares of the women's apparel retailer surged 13 percent in extended hours, after its earnings and revenues for the period trumped analysts expectations.
New York-based Ascena's profit dropped to $47.2 million or $0.29 per share from $63.7 million or $0.40 per share last year. Income from continuing operations dropped to $0.23 per share from $0.40 per share last year. Excluding items, earnings from continuing operations were $0.26 per share.
On average, ten analysts polled by Thomson Reuters expected earnings of $0.23 per share for the second quarter. Analysts' estimates typically exclude special items.
Ascena said sales for the three-month period surged 44 percent to $1.24 billion from $862.0 million last year, driven mainly by sales from the recently acquired Lane Bryant and Catherines businesses. The company also benefited from sales growth at Justice and Maurices brands. Analysts expected revenues of $1.23 billion for the quarter.
Last year, Ascena acquired Charming Shoppes, owner of Lane Bryant and Catherines, for about $890 million, providing access to the large-size women's clothing market.
Gross margins for the quarter declined to 53.5 percent from 55.4 percent last year. Meanwhile, as a percentage of sales, buying, distribution and occupancy expenses increased to 16 percent from 15 percent, and selling, general and administrative costs rose to 28.2 percent from 25.8 percent last year.
Commenting on the results, Chief Executive David Jaffe said, "Our second quarter performance reflects a difficult holiday season during which we utilized promotion and markdown strategies to manage inventory for an effective transition to Spring assortments."
Moving ahead, Ascena reaffirmed its full-year adjusted earnings from continuing operations guidance of $1.20 to $1.30 per share. Analysts currently expect earnings of $1.24 per share for fiscal year 2013.
ASNA closed Monday's trading at $16.53, up $0.07 or 0.43%, on the Nasdaq. The stock gained $2.22 or 13.43% in after-hours trade.
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