Worth Watching Stock: Ascena Retail Group Inc. (NASDAQ:ASNA)

Ascena Retail Group Inc. (NASDAQ:ASNA) reported earnings for the three months ended April 2016 on May 31, 2016. The company earned $0.15 per share on revenue of $1.67B. Analysts had been modeling earning per share of $0.13 with $1.73B in revenue.

ascena retail group, inc. (ASNA) reported financial results for its fiscal third quarter ended April 23, 2016. All adjusted results throughout this release include the results of ANN INC. (“ANN“) in both the current and prior-year periods. Reference should be made to the notes to the accompanying unaudited condensed consolidated financial information for a discussion of theANN acquisition and the use of Non-GAAP financial measures.

For the third quarter of Fiscal 2016, the Company reported earnings of $0.08 per diluted share compared to earnings of $0.15 per diluted share in the same period of Fiscal 2015. The decrease was primarily due to integration costs, interest expense incurred under the $1.8 billion term loan and the effect of non-cash purchase accounting adjustments, all of which were related to the acquisition of ANN, which closed during the first quarter of Fiscal 2016. Also contributing to the year-over-year decline was an increase in the provision for income taxes. For the third quarter of Fiscal 2016, the Company reported adjusted earnings of $0.15 per diluted share. This compares to earnings of $0.16 per diluted share in the same period of Fiscal 2015.

David Jaffe, President and Chief Executive Officer of ascena retail group, inc., commented, “We continued to make progress in the third quarter with key catalysts in our business. The turnaround atJustice is progressing as planned, with improved performance versus last year driven by continued strength in gross margin rate. Our integration of ANN is progressing well, and we remain confident in our $235 million target for deal synergies and cost savings by the end of Fiscal 2018. I am especially pleased with the product-driven strength we have seen at LOFT, which was a bright spot in the quarter.”

Jaffe continued, “At the same time, the environment this Spring has been challenging. After the disruption of a warm holiday season, we’ve had to contend with an unseasonably cold spring and resulting elevated traffic headwinds. While I think we have managed the business well, particularly with respect to inventory levels, we were not able to fully mitigate these challenges. Our earnings exceeded the upper end of our guidance range for the third quarter, but I’ll note that performance benefited from some favorable expense timing that offset softer than expected top-line performance. These expenses will come back in the fourth quarter, and combined with the traffic challenges we’ve seen continue through May, we’ve adjusted our earnings outlook downward.”

Ascena Retail Group Inc. earnings per share showed a decreasing trend of -274% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 84%.Analysts project EPS growth over the next 5 years at 20%. It has EPS annual decline over the past 5 fiscal years of -29.8% when sales grew 15.1. It reported 45.1% sales growth, and -45.9% EPS decline in the last quarter.

The stock is trading at $7.12, up 12.48% from 52-week low of $6.33. The stock trades down -59.52% from its peak of $17.35 and % below the consensus price target of $11.58. Its volume clocked up at 3.41 million shares which is higher than the average volume of 2.83 million shares. Its market capitalization currently stands at $1.37B.

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