Ascena's Stock Slumps After Profit Outlook Cut

Ascena Retail Group Inc.'s stock dropped 6% in after-hours trade Friday, after the apparel retailer cut its full fiscal year profit outlook, citing lower-than-expected sales at its Justice and dressbarn branded stores. The company now expects adjusted earnings per share in the range of 57 cents to 60 cents for the year ending July, down from its previous guidance of 70 cents to 75 cents. Ascena, which agreed in May to buy Ann Inc. said it expects to take a charge of $275 million to $325 million in the fiscal fourth quarter related to its Lane Bryant stores. "While we expected a challenging quarter at Justice due to the sell-down of Spring/Summer merchandise coupled with a significant reduction in promotional activity, our revised fourth quarter expectation incorporates a more complete exit from the existing season's merchandise mix," said Chief Executive David Jaffe. "We did not see dressbarn sales rebound as expected coming out of the third quarter, and are disappointed with the performance of our tops assortment, specifically at higher price points." Ascena's stock had run up 13% over the past three months through Friday, while the S&P 500 had lost 1.2%.