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Ascena Retail Q2 profit down; cuts outlook

BY Staff Writer

Suffern, N.Y. — Ascena Retail Group, the operator of Lane Bryant, Justice and Dress Barn stores, reported second-quarter profit of $31.9 million, down from $47.2 million in the year-ago period. Looking ahead, the company reduced its full-year adjusted earnings guidance to a range of $1.00 to $1.05 per share from its previous guidance range of $1.10 to $1.15 per share.

Sales increased to $1.27 billion from $1.24 billion last year. Same-store sales were flat.

The retailer attributed its profit decrease primarily to profit declines at Justice stores and increased operating expenses from growth-related investments in new stores, merchandising and design resources and e-commerce capabilities, according to the company.

“Second quarter net income was slightly above our revised expectations, despite softer than expected sales in January driven primarily by challenging weather that continued to negatively impact sales into early March,” said Ascena president and CEO David Jaffe. “However, in warmer regions sales have been in line with expectations. We are implementing promotional strategies and receipt flow adjustments to bring inventory balances back to targeted levels.”

Jaffe remained optimistic about the company outlook, citing very good progress on long range strategic priorities related to synergy initiatives and recently completed construction of a new national retail distribution center and a new e-commerce fulfillment center that becomes operational in the spring.

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Bitcoin platform Mt. Gox files bankruptcy; losses total $500 million

BY Dan Berthiaume

Tokyo – Mt. Gox, the Japan-based global bitcoin platform which unexpectedly went offline on Feb. 25, 2014, has filed for bankruptcy and publicly stated that hackers may have stolen as much as $500 million worth of bitcoins from the company and its users.

Following a Feb. 28 bankruptcy petition in Tokyo District Court, Mt. Gox issued a public statement where it listed assets of about $38 million and liabilities of about $64 million. In the statement, Mt. Gox also said illegal access through a software bug in the bitcoin system that began in February 2014 likely resulted in the disappearance of about 750,000 bitcoins belonging to Mt. Gox users and 100,000 bitcoins belonging to Mt. Gox. Furthermore, Mt. Gox said it discovered a discrepancy of about $280 million between the amount of cash financial institutions are holding for Mt. Gox users and the amount of cash they deposited.

Mt. Gox also said it is asking the court to consider allowing it to restore its business to enable eventual repayment of customers and creditors. The current combined value of the lost bitcoins is around $500 million. The company has opened a customer support hotline.

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Ascena reduces outlook further

BY CSA STAFF

Ascena Retail Group, the operator Lane Bryant, Justice and Dress Barn stores, cited increased spending on growth initiatives and a challenging sales climate for a second quarter profit decline and its second full year earnings guidance reduction in two months.

Sales for the company’s second quarter ended Jan. 26 increased 2% to $1.3 billion while consolidated same-store sales were essentially flat. A 3% comp decline at physical stores was offset by 28% e-commerce growth to achieve the overall flat comp increase. Net income fell to $31.9 million, or 19 cents a share, from $47.2 million, or 29 cents a share last year.

The decrease was due primarily to profit declines at Justice stores and increased operating expenses from growth-related investments in new stores, merchandising and design resources and e-commerce capabilities, according to the company.

“Second quarter net income was slightly above our revised expectations, despite softer than expected sales in January driven primarily by challenging weather that continued to negatively impact sales into early March,” said Ascena president and CEO David Jaffe. “However, in warmer regions sales have been in line with expectations. We are implementing promotional strategies and receipt flow adjustments to bring inventory balances back to targeted levels.”

Jaffe remained optimistic about the company outlook, citing very good progress on long range strategic priorities related to synergy initiatives and recently completed construction of a new national retail distribution center and a new e-commerce fulfillment center that becomes operational in the spring.

Ascena’s profits were expected to be under pressure following a January 13 announcement regarding holiday sales during November and December. At the time, Jaffe noted that, “a challenging holiday selling season resulted in increased promotional activity. We successfully cleared excess inventory and have taken the necessary markdowns in the second quarter to transition cleanly into the spring season.”

As a result, the company shaved as much as 20 cents of its full year profit forecast, reducing the range of earnings possibilities to $1.10 to $1.15 from earlier guidance of $1.25 to $1.30 for its fiscal year ending in July. However, late Monday, the company further reduced its full year estimate to a range of $1 to $1.05.

The soft holidays sales and expense pressure followed a respectable showing in the company’s first quarter ended Oct. 26 in which each of its formats posted positive same store sales growth.

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