Ann Taylor Parent Ascena's Stock Plunges Toward Biggest-ever Decline After Profit Warning

Shares of Ann Taylor parent Ascena Retail Group Inc. plunged 41% in premarket trade Thursday toward an 18-year low, after the apparel and accessories retailer's profit and sales warning. The stock was on track to suffer the biggest one-day selloff since it began trading in May 1983, and to open at the lowest level seen since May 24, 1999. The company said late Wednesday that amid an "unprecedented secular change" in the specialty retail sector, it no longer expects a stabilization of traffic. Ascena said it now expects fiscal third-quarter adjusted earnings per share of 4 cents to 6 cents, below the EPS guidance provided two months ago of 7 cents to 12 cents. Same-store sales are now expected to drop 8%, while the FactSet consensus at the end of April was for a 4.8% decline. Ascena said it would expand cost-cutting measures to deliver $250 million to $300 million in cost savings, compared with a previous target of $150 million. The company said it now expects to record a "material non-cash impairment charge" of its goodwill and intangible assets in the third quarter. The stock had already lost more than half its value through Wednesday, while the SPDR S&P Retail ETF has shed 7.2% and the S&P 500 has gained 5.3%.