ASNA most likely to mirror back to $8 and then $15 in ~12 months
Article Link:
https://aicody.com/articles/stocks/ascena-retail-group-inc-retail-apparel-women-stock-analysis-rating-2018-forecast-a0wlqfue72ae5jcn/
ASNA is a long-established ecommerce and store retailer, which appears to be solidly back in the competition in such a highly competitive space wherein companies often face operational challenges such as Sears, forced to be merged or acquired such as Versace, or go out of business. However, ASNA's recent financial statements, 57 years of operations, sales concentration on fashion-forward women, geographical center of attention in the U.S., Canada, and Puerto Rico, and recent rent reduction plans for its unnecessary stores are the fundamental forces for cost reduction, which is the sole key to profitability and scalability in this sector. Thus, we hold reasons to believe that ASNA's stocks currently project plus buy and double plus hold ratings suitable for both trade and investment purposes.
Company Summary
Ascena Retail Group, Inc. (ASNA) is an ecommerce and store retailer in the US, Canada and Puerto Rico, offering apparel, shoes, and accessories for women via the Premium Fashion segment (Ann Taylor, LOFT, and Lou & Grey), Value Fashion segment (maurices and dressbarn), Plus Fashion segment (Lane Bryant, Catherines and Cacique), and for tween girls via the Kids Fashion segment (Justice). ASNA operates ~4,600 stores and the following domains:
AnnTaylor.com
ascenaretail.com
Catherines.com
dressbarn.com
factory.anntaylor.com
lanebryant.com
LOFT.com
louandgrey.com
maurices.com
outlet.loft.com
shopjustice.com
Institutional Shareholders
BlackRock Fund Advisors: 22.7M (11.57%) reported on 06/30/18
Charles Schwab Investment Management, Inc.: 6.1M (3.1%) reported on 06/30/18
Dimensional Fund Advisors LP: 16.4M (8.37%) reported on 06/30/18
Nomura Securities Co., Ltd. (Private Banking): 17M 8.67% reported on 06/30/18
PRIMECAP Management Co.: 9.2M (4.67%) reported on 06/30/18
Renaissance Technologies LLC: 4.7M (2.38%) reported on 06/30/18
Sapience Investments LLC: 4.1M (2.08%) reported on 06/30/18
SSgA Funds Management, Inc.: 4.8M (2.45%) reported on 06/30/18
Stadium Capital Management LLC: 19.2M (9.8%) reported on 06/30/18
The Vanguard Group, Inc.: 15.7M (8.02%) reported on 06/30/18
Mutual Funds Shareholders
DFA US Small Cap Value Portfolio: 5.02M (2.56%) reported on 04/30/18
iShares Core S&P Small Cap ETF: 9.58M (4.88%) reported on 09/6/18
iShares Russell 2000 ETF: 3.67M (1.87%) reported on 09/6/18
iShares S&P Small Cap 600 Value ETF: 2.72M (1.39%) reported on 09/6/18
PRIMECAP Odyssey Stock Fund: 4.1M (2.09%) reported on 06/30/18
Schwab Fundamental US Small Company Index ETF: 3.46M (1.76%) reported on 09/6/18
Vanguard Extended Market Index Fund: 2.27M (1.16%) reported on 08/31/18
Vanguard Small Cap Index Fund: 4.21M (2.15%) reported on 08/31/18
Vanguard Small Cap Value Index Fund: 2.63M (1.34%) reported on 08/31/18
Vanguard Total Stock Market Index Fund: 4.15M (2.11%) reported on 08/31/18
Financial Summary
For the fourth quarter of Fiscal 2018, ASNA reported GAAP income of $0.17 per diluted share compared to a GAAP loss of $0.08 per diluted share in the year-ago period, based on a 4% comparable sales increase and the benefit of an additional week related to ASNA's fiscal calendar. For the fourth quarter of Fiscal 2018, ASNA reported adjusted earnings of $0.07 per diluted share compared to adjusted earnings of $0.05 per diluted share in the year-ago period.
For full year Fiscal 2018, ASNA reported a GAAP loss of $0.20 per diluted share reflecting a comparable sales decline of 2% and costs associated with ASNA's Change for Growth transformation program, partially offset by the benefit of the additional week. ASNA reported a GAAP loss of $5.48 per diluted share in the year-ago period which included a non-cash pre-tax impairment charge of 1.324B to write down a portion of ASNA's intangible assets. Adjusted earnings for 2018 were a loss of $0.02 per diluted share compared to adjusted earnings of $0.22 per diluted share in the year-ago period.
Sales
Net sales for the fourth quarter of Fiscal 2018 were $1,766M compared to $1,658M in the year-ago period, with the increase caused by a 4% increase in comparable sales and ~
88M of sales associated with the additional week.
Growth Margin
Gross margin increased to 1.01B, or 57.5% of sales, for the fourth quarter of Fiscal 2018 compared to 0.95B, or 57.4% of sales in the year-ago period. Gross margin increased from the year-ago period due to increased comparable sales and ~50M associated with the additional week. Gross margin rate increased 10 basis points, with strong rate improvement at our Premium Fashion and Kids Fashion segments mostly offset by declines at our Plus Fashion and Value Fashion segments. In our Plus Fashion segment, merchandise margin increased from the year-ago period, reflecting improving assortment performance and disciplined inventory management, with the offset caused primarily by higher freight expense resulting from increased digital penetration. The decline in our Value Fashion segment was caused primarily by lower clearance price points at dressbarn.
Distributions
Buying, distribution, and occupancy (“BD&O”) expenses for the fourth quarter of Fiscal 2018 increased to 324M, which represented 18.4% of sales, compared to 320M, or 19.3% of sales in the year-ago period and included ~3M of expense associated with the additional week. In terms of dollars, lower occupancy expenses resulting from our fleet optimization program were more than offset by higher variable distribution costs related to the increased penetration of our direct channel business and the expenses associated with the additional week.
General and Administrative
Selling, general, and administrative (“SG&A”) expenses for the fourth quarter of Fiscal 2018 increased 5% to 527M, or 29.8% of sales, compared to 500M, or 30.1% of sales in the year-ago period. The increase in SG&A expenses was primarily due to
18M of expense associated with the additional week, inflationary increases and higher performance-based compensation, offset in part by ~330M in synergies and cost reduction initiatives.
Operating Loss
Operating income for the fourth quarter of Fiscal 2018 was 53M compared to an operating loss of 9M in the year-ago period. The increase in the current year primarily reflects the impact of the additional week, which generated ~330M, lower costs associated with the Change for Growth transformation program as well as lower acquisition-related costs. On a non-GAAP adjusted basis, operating income was 43M in the fourth quarter of Fiscal 2018, compared to 44M in the year ago period as the growth from the comparable sales increase and the impact of the cost savings initiatives were offset by inflationary increases and higher performance-based compensation.
Net Income
ASNA reported Net income of 33M, or $0.17 per diluted share in the fourth quarter of Fiscal 2018, compared to a net loss of 16M, or $0.08 per diluted share, in the year-ago period.
2018 Q1 Financial Highlights
ASNA ended the fourth quarter of Fiscal 2018 with Cash and cash equivalents of 239M.
ASNA ended the fourth quarter of Fiscal 2018 with inventory of 623M, down 3% from the year-ago period.
Capital expenditures totaled
54M in the fourth quarter of Fiscal 2018, primarily to support new capabilities and strategic initiatives. Full year Fiscal 2018 capital expenditures totaled 181M.
ASNA ended the fourth quarter of Fiscal 2018 with total debt of $1,372M, which represents the balance remaining on the term loan. There were no borrowings outstanding under ASNA's revolving credit facility at the end of the fourth quarter of Fiscal 2018. In addition, ASNA had 473M of borrowing availability under its revolving credit facility. During the fourth quarter of Fiscal 2018, ASNA repaid 203M of its term loan and its next scheduled repayment is in November of calendar year 2020.
Store and Rent Reductions
ASNA closed a net 185 stores during Fiscal 2018 which primarily reflects its continuing fleet optimization program. Under the program, ASNA has decreased ~50M in annualized rent reductions through landlord negotiations. ASNA's number of stores on a brand-by-brand basis from quarter third to fourth is as follows:
Ann Taylor: 306 - 2 = 304
LOFT: 674 - 2 = 672
maurices: 986 - 14 = 972
dressbarn: 739 - 9 = 730
Lane Bryant: 752 - 3 = 749 (4 Closed - 1 Opened = 3)
Catherines: 351 - 3 = 348
Justice: 855 - 8 = 847
Total: 4,663 - 41 = 4,622
Forward-Looking Statements for 2019
ASNA is re-instituting full year guidance and expects Fiscal 2019 full year non-GAAP earnings per share ranging from $0.00 to $0.10, supported by the following assumptions:
Net sales of $6.45 to 6.55B
Comparable sales up low single digits;
Gross margin rate of 57.6% to 58.1%;
Operating expense growth of ~1%;
Depreciation and amortization of $327 to 332M;
Operating income of $120 to 140M;
Interest expense of ~112M;
Income taxes ~8M reflecting a 21% tax rate and minimum taxes; and
Diluted share count of 200M.
Full year capital expenditures are expected in the range of $180 to 210M, and ASNA expects to close ~5% of its Fiscal 2018 year-end fleet, with store count dropping into the range of 4,375 to 4,425 by July 2019.
Forward-Looking Statements for 2019 Q1
Fiscal year 2019 first quarter non-GAAP earnings per share is estimated in the range of $(0.04) to $0.06, reflecting a collective unfavorable timing impact of ~$0.10 related to the additional week in Fiscal 2018, which shifted the peak Justice back-to-school week from week 1 of Fiscal 2019 to week 52, and timing related to the adoption of the revenue recognition accounting pronouncement, Accounting Standards Update 2014-19, "Revenue from Contracts with Customers." ASNA's estimated Fiscal 2019 first quarter earnings per share outlook is supported by the following assumptions:
Net sales of $1.54 to 1.56B;
Comparable sales flat to up 2%;
Gross margin rate of 60.0% to 60.5%;
Operating expense growth of 1% to 2%;
Depreciation and amortization expense of ~84M;
Operating income of $22 to 42M;
Interest expense of ~
27M;
Income taxes of ~3M reflecting a 21% tax rate and minimum taxes; and
Diluted share count of 200M.
CEO's Comments
Mr. David Jaffe commented that “Our fourth quarter reflected sequential comp improvement across all our brands, and the first enterprise-level positive comp quarter for ascena since the second quarter of Fiscal 2015. Comparable sales increased 4%, and excluding dressbarn, all brands delivered positive comps. Specific to dressbarn, we delivered a 9 percentage point sequential comparable sales improvement from our third quarter, and have fully reset the brand’s inventory position heading into Fiscal 2019. Adjusted earnings per share of 7 cents came in above our guide, and while we were pleased with progress for the quarter, it represents only the first step in our road back to realizing ascena’s full earnings potential.”
Mr. Jaffe states that “We continue to make good progress across the three pillars of our Change for Growth transformation program. We remain on track to achieve 300M in annual run rate savings by July 2019, and are currently implementing the two remaining large capability-building components of our transformation program - localized planning and our customer experience management ecosystem. And as we enter Fiscal 2019, we are leveraging the foundation we’ve built over the past two years to pivot the organization toward the most critical pillar of our transformation program - reinvigorating growth from our core.”
Mr. Jaffe believes that “We remain committed to realizing the full value of our brand portfolio and platform capability. At the core of future shareholder value creation is the promise of a highly differentiated and growing group of leading brands, supported by a cost efficient infrastructure. We entered Fiscal 2019 with good base momentum, and key growth initiatives beginning to gain traction across our brands. We are making headway with stabilization of our dressbarn brand, and will continue to explore opportunities across our brand portfolio to create shareholder value."
Statistics
Shares Outstanding: 0.2B
Avg Daily Vol: 2.5M
Market Cap: ~1B
52-Week High: $5.29
52-Week Low: $1.69
Forward PE: 203.4
Annual Div/Dividend Yield: 0.00% / 2.5%
Annual Rev: ~7B
Inst Own: 82.5%
1-Month Return: 10.9%
3-Month Return: 5.1%
Next Earnings Report Date: 12/03/2018
Earnings ESP: $0.05
Revenue Per Employee: $98,759
Money Flow Ratio: 0.94 %
Profitability
Revenue Growth: 1.3% (Sector Average 5.2%)
Gross Margin: 57.5% (Sector Average 31.9%)
Return on Equity: 24.6% (Sector Average 19.8%)
Net Margin: 2.0% (Sector Average 2.9%)
Debt
Current Ratio: 1.1 (Sector Average 1.4)
Debt-to-Capital: 60.1% (Sector Average 51.0%)
Interest Funding: 18.3% (Sector Average 7.5%)
Interest Coverage: 0.1 (Sector Average 3.7)
Dividend
Dividend Growth: NA (Sector Average 1.0%)
Dividend Payout: NA (Sector Average 45.7%)
Dividend Coverage: NA (Sector Average 4.5)
Dividend Yield: NA (Sector Average 0.0%)
Top Peer Companies
Abercrombie & Fitch Company (ANF)
Amazon.com, Inc (AMZN)
American Eagle Outfitters, Inc (AEO)
Ascena Retail Group, Inc (ASNA)
Buckle Inc (BKE)
Cato Corporation (CATO)
Citi Trends, Inc (CTRN)
Dillard's Inc (DDS)
DSW Inc (DSW)
Etsy Inc (ETSY)
Express Inc (EXPR)
Five Below Inc (FIVE)
Francesca's Holding Corp (FRAN)
Gap Inc (GPS)
Genesco Inc (GCO)
J C Penney Company Inc (JCP)
Kohl's Corporation (KSS)
Lands End Inc (LE)
Macy's Inc (M)
Marks And Spencer Group PLC (MAKSY)
Marui Group Co LTD (MAURY)
Neiman Marcus Group, Inc (NMG)
New York & Company Inc (NWY)
Nordstrom Inc (JWN)
Qurate Retail Inc (QRTEA)
Ross Stores Inc (ROST)
Sears Holdings Corp (SHLD)
Sears Hometown and Outlet (SHOS)
Target Corporation (TGT)
Tillys Inc (TLYS)
Walmart Inc (WMT)
Wayfair Inc (W)
Guidance 2019 Q1
Total Sales: $1.54-1.56B
Gross Margin: 60.0%-60.5%
Depreciation and amortization: ~84M
Operating Income: $22-42M
Interest Expense: ~27M
Diluted Share Count: 200M
EPS: $0.04-$0.06
Guidance 2019
Total Sales: $6.45-6.55B
Gross Margin: 57.6%-58.1%
Depreciation and amortization: $327-332M
Operating Income: $120-140M
Interest Expense: ~112M
Diluted Share Count: 200M
EPS: $0.00-$0.10
Stores: 4,375-4,425
12 Month Price Target
Mean: $8.33
High: $15.01
Low: $2.18
Earnings Surprise
Positive (+6.7%)
Trade and Investment Ratings
Ratings from strongest (+++) to weakest (---) are as follows:
60-Month Investment: +++
36-Month Investment: ++
12-Month Investment: +
3-Month Investment: Neutral
1-Month Investment: Neutral
Single Day-Trade: Neutral
Multi Day-Trade: Neutral
Single Short-Term Short-Sell: Neutral
Multi Short-Term Short-Sell: -
Long-Term Short-Sell: --
https://aicody.com/articles/stocks/ascena-retail-group-inc-retail-apparel-women-stock-analysis-rating-2018-forecast-a0wlqfue72ae5jcn/
ASNA is a long-established ecommerce and store retailer, which appears to be solidly back in the competition in such a highly competitive space wherein companies often face operational challenges such as Sears, forced to be merged or acquired such as Versace, or go out of business. However, ASNA's recent financial statements, 57 years of operations, sales concentration on fashion-forward women, geographical center of attention in the U.S., Canada, and Puerto Rico, and recent rent reduction plans for its unnecessary stores are the fundamental forces for cost reduction, which is the sole key to profitability and scalability in this sector. Thus, we hold reasons to believe that ASNA's stocks currently project plus buy and double plus hold ratings suitable for both trade and investment purposes.
Company Summary
Ascena Retail Group, Inc. (ASNA) is an ecommerce and store retailer in the US, Canada and Puerto Rico, offering apparel, shoes, and accessories for women via the Premium Fashion segment (Ann Taylor, LOFT, and Lou & Grey), Value Fashion segment (maurices and dressbarn), Plus Fashion segment (Lane Bryant, Catherines and Cacique), and for tween girls via the Kids Fashion segment (Justice). ASNA operates ~4,600 stores and the following domains:
AnnTaylor.com
ascenaretail.com
Catherines.com
dressbarn.com
factory.anntaylor.com
lanebryant.com
LOFT.com
louandgrey.com
maurices.com
outlet.loft.com
shopjustice.com
Institutional Shareholders
BlackRock Fund Advisors: 22.7M (11.57%) reported on 06/30/18
Charles Schwab Investment Management, Inc.: 6.1M (3.1%) reported on 06/30/18
Dimensional Fund Advisors LP: 16.4M (8.37%) reported on 06/30/18
Nomura Securities Co., Ltd. (Private Banking): 17M 8.67% reported on 06/30/18
PRIMECAP Management Co.: 9.2M (4.67%) reported on 06/30/18
Renaissance Technologies LLC: 4.7M (2.38%) reported on 06/30/18
Sapience Investments LLC: 4.1M (2.08%) reported on 06/30/18
SSgA Funds Management, Inc.: 4.8M (2.45%) reported on 06/30/18
Stadium Capital Management LLC: 19.2M (9.8%) reported on 06/30/18
The Vanguard Group, Inc.: 15.7M (8.02%) reported on 06/30/18
Mutual Funds Shareholders
DFA US Small Cap Value Portfolio: 5.02M (2.56%) reported on 04/30/18
iShares Core S&P Small Cap ETF: 9.58M (4.88%) reported on 09/6/18
iShares Russell 2000 ETF: 3.67M (1.87%) reported on 09/6/18
iShares S&P Small Cap 600 Value ETF: 2.72M (1.39%) reported on 09/6/18
PRIMECAP Odyssey Stock Fund: 4.1M (2.09%) reported on 06/30/18
Schwab Fundamental US Small Company Index ETF: 3.46M (1.76%) reported on 09/6/18
Vanguard Extended Market Index Fund: 2.27M (1.16%) reported on 08/31/18
Vanguard Small Cap Index Fund: 4.21M (2.15%) reported on 08/31/18
Vanguard Small Cap Value Index Fund: 2.63M (1.34%) reported on 08/31/18
Vanguard Total Stock Market Index Fund: 4.15M (2.11%) reported on 08/31/18
Financial Summary
For the fourth quarter of Fiscal 2018, ASNA reported GAAP income of $0.17 per diluted share compared to a GAAP loss of $0.08 per diluted share in the year-ago period, based on a 4% comparable sales increase and the benefit of an additional week related to ASNA's fiscal calendar. For the fourth quarter of Fiscal 2018, ASNA reported adjusted earnings of $0.07 per diluted share compared to adjusted earnings of $0.05 per diluted share in the year-ago period.
For full year Fiscal 2018, ASNA reported a GAAP loss of $0.20 per diluted share reflecting a comparable sales decline of 2% and costs associated with ASNA's Change for Growth transformation program, partially offset by the benefit of the additional week. ASNA reported a GAAP loss of $5.48 per diluted share in the year-ago period which included a non-cash pre-tax impairment charge of 1.324B to write down a portion of ASNA's intangible assets. Adjusted earnings for 2018 were a loss of $0.02 per diluted share compared to adjusted earnings of $0.22 per diluted share in the year-ago period.
Sales
Net sales for the fourth quarter of Fiscal 2018 were $1,766M compared to $1,658M in the year-ago period, with the increase caused by a 4% increase in comparable sales and ~
88M of sales associated with the additional week.Growth Margin
Gross margin increased to 1.01B, or 57.5% of sales, for the fourth quarter of Fiscal 2018 compared to 0.95B, or 57.4% of sales in the year-ago period. Gross margin increased from the year-ago period due to increased comparable sales and ~50M associated with the additional week. Gross margin rate increased 10 basis points, with strong rate improvement at our Premium Fashion and Kids Fashion segments mostly offset by declines at our Plus Fashion and Value Fashion segments. In our Plus Fashion segment, merchandise margin increased from the year-ago period, reflecting improving assortment performance and disciplined inventory management, with the offset caused primarily by higher freight expense resulting from increased digital penetration. The decline in our Value Fashion segment was caused primarily by lower clearance price points at dressbarn.
Distributions
Buying, distribution, and occupancy (“BD&O”) expenses for the fourth quarter of Fiscal 2018 increased to 324M, which represented 18.4% of sales, compared to 320M, or 19.3% of sales in the year-ago period and included ~3M of expense associated with the additional week. In terms of dollars, lower occupancy expenses resulting from our fleet optimization program were more than offset by higher variable distribution costs related to the increased penetration of our direct channel business and the expenses associated with the additional week.
General and Administrative
Selling, general, and administrative (“SG&A”) expenses for the fourth quarter of Fiscal 2018 increased 5% to 527M, or 29.8% of sales, compared to 500M, or 30.1% of sales in the year-ago period. The increase in SG&A expenses was primarily due to
18M of expense associated with the additional week, inflationary increases and higher performance-based compensation, offset in part by ~330M in synergies and cost reduction initiatives.Operating Loss
Operating income for the fourth quarter of Fiscal 2018 was 53M compared to an operating loss of 9M in the year-ago period. The increase in the current year primarily reflects the impact of the additional week, which generated ~330M, lower costs associated with the Change for Growth transformation program as well as lower acquisition-related costs. On a non-GAAP adjusted basis, operating income was 43M in the fourth quarter of Fiscal 2018, compared to 44M in the year ago period as the growth from the comparable sales increase and the impact of the cost savings initiatives were offset by inflationary increases and higher performance-based compensation.
Net Income
ASNA reported Net income of 33M, or $0.17 per diluted share in the fourth quarter of Fiscal 2018, compared to a net loss of 16M, or $0.08 per diluted share, in the year-ago period.
2018 Q1 Financial Highlights
ASNA ended the fourth quarter of Fiscal 2018 with Cash and cash equivalents of 239M.
ASNA ended the fourth quarter of Fiscal 2018 with inventory of 623M, down 3% from the year-ago period.
Capital expenditures totaled
54M in the fourth quarter of Fiscal 2018, primarily to support new capabilities and strategic initiatives. Full year Fiscal 2018 capital expenditures totaled 181M.ASNA ended the fourth quarter of Fiscal 2018 with total debt of $1,372M, which represents the balance remaining on the term loan. There were no borrowings outstanding under ASNA's revolving credit facility at the end of the fourth quarter of Fiscal 2018. In addition, ASNA had 473M of borrowing availability under its revolving credit facility. During the fourth quarter of Fiscal 2018, ASNA repaid 203M of its term loan and its next scheduled repayment is in November of calendar year 2020.
Store and Rent Reductions
ASNA closed a net 185 stores during Fiscal 2018 which primarily reflects its continuing fleet optimization program. Under the program, ASNA has decreased ~50M in annualized rent reductions through landlord negotiations. ASNA's number of stores on a brand-by-brand basis from quarter third to fourth is as follows:
Ann Taylor: 306 - 2 = 304
LOFT: 674 - 2 = 672
maurices: 986 - 14 = 972
dressbarn: 739 - 9 = 730
Lane Bryant: 752 - 3 = 749 (4 Closed - 1 Opened = 3)
Catherines: 351 - 3 = 348
Justice: 855 - 8 = 847
Total: 4,663 - 41 = 4,622
Forward-Looking Statements for 2019
ASNA is re-instituting full year guidance and expects Fiscal 2019 full year non-GAAP earnings per share ranging from $0.00 to $0.10, supported by the following assumptions:
Net sales of $6.45 to 6.55B
Comparable sales up low single digits;
Gross margin rate of 57.6% to 58.1%;
Operating expense growth of ~1%;
Depreciation and amortization of $327 to 332M;
Operating income of $120 to 140M;
Interest expense of ~112M;
Income taxes ~8M reflecting a 21% tax rate and minimum taxes; and
Diluted share count of 200M.
Full year capital expenditures are expected in the range of $180 to 210M, and ASNA expects to close ~5% of its Fiscal 2018 year-end fleet, with store count dropping into the range of 4,375 to 4,425 by July 2019.
Forward-Looking Statements for 2019 Q1
Fiscal year 2019 first quarter non-GAAP earnings per share is estimated in the range of $(0.04) to $0.06, reflecting a collective unfavorable timing impact of ~$0.10 related to the additional week in Fiscal 2018, which shifted the peak Justice back-to-school week from week 1 of Fiscal 2019 to week 52, and timing related to the adoption of the revenue recognition accounting pronouncement, Accounting Standards Update 2014-19, "Revenue from Contracts with Customers." ASNA's estimated Fiscal 2019 first quarter earnings per share outlook is supported by the following assumptions:
Net sales of $1.54 to 1.56B;
Comparable sales flat to up 2%;
Gross margin rate of 60.0% to 60.5%;
Operating expense growth of 1% to 2%;
Depreciation and amortization expense of ~84M;
Operating income of $22 to 42M;
Interest expense of ~
27M;Income taxes of ~3M reflecting a 21% tax rate and minimum taxes; and
Diluted share count of 200M.
CEO's Comments
Mr. David Jaffe commented that “Our fourth quarter reflected sequential comp improvement across all our brands, and the first enterprise-level positive comp quarter for ascena since the second quarter of Fiscal 2015. Comparable sales increased 4%, and excluding dressbarn, all brands delivered positive comps. Specific to dressbarn, we delivered a 9 percentage point sequential comparable sales improvement from our third quarter, and have fully reset the brand’s inventory position heading into Fiscal 2019. Adjusted earnings per share of 7 cents came in above our guide, and while we were pleased with progress for the quarter, it represents only the first step in our road back to realizing ascena’s full earnings potential.”
Mr. Jaffe states that “We continue to make good progress across the three pillars of our Change for Growth transformation program. We remain on track to achieve 300M in annual run rate savings by July 2019, and are currently implementing the two remaining large capability-building components of our transformation program - localized planning and our customer experience management ecosystem. And as we enter Fiscal 2019, we are leveraging the foundation we’ve built over the past two years to pivot the organization toward the most critical pillar of our transformation program - reinvigorating growth from our core.”
Mr. Jaffe believes that “We remain committed to realizing the full value of our brand portfolio and platform capability. At the core of future shareholder value creation is the promise of a highly differentiated and growing group of leading brands, supported by a cost efficient infrastructure. We entered Fiscal 2019 with good base momentum, and key growth initiatives beginning to gain traction across our brands. We are making headway with stabilization of our dressbarn brand, and will continue to explore opportunities across our brand portfolio to create shareholder value."
Statistics
Shares Outstanding: 0.2B
Avg Daily Vol: 2.5M
Market Cap: ~1B
52-Week High: $5.29
52-Week Low: $1.69
Forward PE: 203.4
Annual Div/Dividend Yield: 0.00% / 2.5%
Annual Rev: ~7B
Inst Own: 82.5%
1-Month Return: 10.9%
3-Month Return: 5.1%
Next Earnings Report Date: 12/03/2018
Earnings ESP: $0.05
Revenue Per Employee: $98,759
Money Flow Ratio: 0.94 %
Profitability
Revenue Growth: 1.3% (Sector Average 5.2%)
Gross Margin: 57.5% (Sector Average 31.9%)
Return on Equity: 24.6% (Sector Average 19.8%)
Net Margin: 2.0% (Sector Average 2.9%)
Debt
Current Ratio: 1.1 (Sector Average 1.4)
Debt-to-Capital: 60.1% (Sector Average 51.0%)
Interest Funding: 18.3% (Sector Average 7.5%)
Interest Coverage: 0.1 (Sector Average 3.7)
Dividend
Dividend Growth: NA (Sector Average 1.0%)
Dividend Payout: NA (Sector Average 45.7%)
Dividend Coverage: NA (Sector Average 4.5)
Dividend Yield: NA (Sector Average 0.0%)
Top Peer Companies
Abercrombie & Fitch Company (ANF)
Amazon.com, Inc (AMZN)
American Eagle Outfitters, Inc (AEO)
Ascena Retail Group, Inc (ASNA)
Buckle Inc (BKE)
Cato Corporation (CATO)
Citi Trends, Inc (CTRN)
Dillard's Inc (DDS)
DSW Inc (DSW)
Etsy Inc (ETSY)
Express Inc (EXPR)
Five Below Inc (FIVE)
Francesca's Holding Corp (FRAN)
Gap Inc (GPS)
Genesco Inc (GCO)
J C Penney Company Inc (JCP)
Kohl's Corporation (KSS)
Lands End Inc (LE)
Macy's Inc (M)
Marks And Spencer Group PLC (MAKSY)
Marui Group Co LTD (MAURY)
Neiman Marcus Group, Inc (NMG)
New York & Company Inc (NWY)
Nordstrom Inc (JWN)
Qurate Retail Inc (QRTEA)
Ross Stores Inc (ROST)
Sears Holdings Corp (SHLD)
Sears Hometown and Outlet (SHOS)
Target Corporation (TGT)
Tillys Inc (TLYS)
Walmart Inc (WMT)
Wayfair Inc (W)
Guidance 2019 Q1
Total Sales: $1.54-1.56B
Gross Margin: 60.0%-60.5%
Depreciation and amortization: ~84M
Operating Income: $22-42M
Interest Expense: ~
27M Diluted Share Count: 200M
EPS: $0.04-$0.06
Guidance 2019
Total Sales: $6.45-6.55B
Gross Margin: 57.6%-58.1%
Depreciation and amortization: $327-332M
Operating Income: $120-140M
Interest Expense: ~112M
Diluted Share Count: 200M
EPS: $0.00-$0.10
Stores: 4,375-4,425
12 Month Price Target
Mean: $8.33
High: $15.01
Low: $2.18
Earnings Surprise
Positive (+6.7%)
Trade and Investment Ratings
Ratings from strongest (+++) to weakest (---) are as follows:
60-Month Investment: +++
36-Month Investment: ++
12-Month Investment: +
3-Month Investment: Neutral
1-Month Investment: Neutral
Single Day-Trade: Neutral
Multi Day-Trade: Neutral
Single Short-Term Short-Sell: Neutral
Multi Short-Term Short-Sell: -
Long-Term Short-Sell: --
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