Why Ascena Retail Group, Inc. Stock Lost 11.5% Last Month

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What happened

Shares of Ascena Retail Group (NASDAQ: ASNA) dropped last month after the parent of brands including Lane Bryant and Ann Taylor posted another disappointing earnings report. According to data from S&P Global Market Intelligence, the stock finished March down 11.5%.

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During a time when other retailers were seeing growth during the key holiday season, Ascena said comparable sales fell and its net loss widened. As the chart below shows, the stock's losses for the month came in the days following the March 5 report.

So what

Ascena said companywide comparable sales were down 2% for the quarter, but only grew at one chain, kids' store Justice, which saw same-store sales rise 7%. Dressbarn was the worst performer, with comps off 12%. Overall revenue was down 1.7% to $1.72 billion. Gross margin was essentially flat, falling just 10 basis points to 54%, due to improvements in the plus-size and kids segments. On the bottom line, its adjusted loss per share expanded from $0.07 to $0.12, missing estimates for a $0.09-per-share loss.

Management blamed merchandise strategy challenges and store traffic declines for the weak performance, and CEO David Jaffe added, "An improvement in top-line trend was offset by margin rate pressure primarily related to the final clearance of non-performing product categories at our Value Fashion and Premium Fashion segments that carried over from the first quarter."

Following the report, Standard & Poor's lowered its credit rating on Ascena from B to B+.

Now what

Jaffe went on to say that the company is on track in its three-year transformation plan, which includes $300 million in costs savings by July 2019. Still, Ascena's guidance called for more losses as it sees comparable sales falling 3%-5% in the current quarter and expects a loss per share of $0.12 to $0.07 in the period. Ascena stock has gotten crushed over the last few years, and until management can find a way to reverse the same-store sales decline, shares will likely continue to suffer.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.