Ascena Shares Jump After Store Closures, Rent Reductions Announced
Ascena Retail Group Inc. shares are up 7.3% in Monday trading, extending Friday's rally, after the company's said last week that it expects to close or realize rent reductions on more than 650 stores as lease terms reach maturity between 2017 and July 2019. That represents nearly 25% of the company's fleet. Ascena brands include Ann Taylor, Loft, Lane Bryant and DressBarn. The company has identified 250 locations that will be closed through July 2019. An additional 400 stores or more will be closed if rent concessions aren't granted after landlord negotiations, David Jaffe, Ascena chief executive, said on the late Thursday earnings call. "We expect our fleet optimization program will be earnings-accretive and will deliver working capital benefits," he said. The company also expects efficiencies and other cost savings, he said. Ascena reported third-quarter adjusted earnings per share of 5 cents, below the 6-cent FactSet consensus. Sales totaled $1.57 billion, down from $1.67 billion last year, but ahead of the $1.56 billion FactSet consensus. Same-store sales were down 8% with the biggest declines at Maurices (down 12%) and Lane Bryant (down 11%). Shares closed up more than 21% on Friday, the biggest one-day gain in its history. Ascena went public on June 9, 2014. Ascena stock is down nearly 62% for the year so far, while the S&P 500 index is up 8.4% for the period.
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