Ascena Retail Group reported financial results for its fiscal second quarter ended January 24, 2015. Earnings from continuing operations were $0.05 per diluted share.
Article continues below
This compares to earnings from continuing operations of $0.19 per diluted share in the same period of Fiscal 2014. Adjusted earnings from continuing operations in the second quarter of Fiscal 2015 were $0.07 per diluted share, compared to $0.23 per diluted share in the prior year’s second quarter.
Net sales for the second quarter of Fiscal 2015 increased 1.7% to $1.289 billion, compared to $1.267 billion in the second quarter of Fiscal 2014, as new store growth at Justice and maurices and positive combined comparable sales at Lane Bryant, maurices, dressbarn and Catherines was offset by negative combined comparable sales at Justice.
Gross margin was $662 million, or 51.4% of sales for the second quarter of Fiscal 2015, which was flat when expressed in terms of dollars but down from the prior year rate of 52.3% of sales.
The decrease in the gross margin rate was caused by significantly higher markdowns at Justice to clear seasonal inventory. Excluding Justice, we saw gross margin rate improvement across all of our other brands, with the largest increase coming at dressbarn.
Buying, distribution and occupancy (BD&O) expenses for the second quarter of Fiscal 2015 were $216.4 million, or 16.8% of sales, compared to $210.5 million, or 16.6% of sales in the second quarter of last year.
The expense increase versus last year primarily reflects the impact of new store growth at Justice and maurices, along with increased merchandising and design capability at maurices and dressbarn to support product development.
Selling, general and administrative (SG&A) expenses for the second quarter of Fiscal 2015 were $371.7 million, or 28.8% of sales, compared to $349.7 million, or 27.6% of sales in the second quarter of last year.
The increases to last year were primarily related to wage increases, store payroll costs on a higher unit base, increased marketing and direct channel support, and higher store asset impairment charges primarily related to the lower-than-expected operating performance of certain retail locations, primarily at Justice.
Operating income for the second quarter of Fiscal 2015 was $16.6 million, or 1.3% of sales, compared to $49.0 million, or 3.9% of sales last year. On an adjusted basis, operating income for the second quarter of Fiscal 2015 was $22.0 million, or 1.7% of sales compared to $59.0 million, or 4.7% of second quarter sales last year. ■