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Ascena Posts Poor Holiday Sales, Guides Low

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Ascena Retail Group Inc. (ASNA - Free Report) reported disappointing sales results for the holiday period, leading it to lower its earnings guidance.

The company recorded a 1% increase in consolidated comparable sales (comps) for the November and December period ended Dec 28, 2013, including a 2% fall in store sales and a 27% jump in e-Commerce sales.

Brand wise, the Justice brand saw a 3% decline in comps, while comps at Lane Bryant, dressbarn and Catherines brands increased by 8%, 1% and 13%, respectively. Further, the maurices brand delivered flat comps during the same period.

This N.Y. based company announced that sales for the holiday season came below expectations, mainly due to the competitive promotional forces pressurizing the retail environment.

Following the soft sales results, this Zacks Rank #3 (Hold) company lowered its earnings per share outlook for the current fiscal 2014. The apparel retailer now envisions earnings between $1.10 and $1.15 per share, below the previously announced band of $1.25-$1.30 per share. The Zacks Consensus Estimate for the current fiscal year stands at $1.13 per share, falling within the company’s current predicted band.

Moreover, Ascena expects its store comps to increase in the low single digits in the spring season and e-commerce sales to show a double-digit rise. The company still plans to open roughly 185 new outlets and shut down nearly 135 outlets during the year, bringing its store count to 3900 by the end of fiscal 2014.

Given the tough holiday period, Ascena is not the only retailer to have cut its forecast due to lower-than-expected sales and margin pressure following intense price competition that resulted in huge discounts. Retailers that lowered guidance battered by the holiday results include apparel retailers Pacific Sunwear of California Inc. , L Brands Inc. (LB - Free Report) and American Eagle Outfitters Inc. (AEO - Free Report) .

Pacific Sunwear now expects its fourth-quarter fiscal 2013 loss to lie between 18-21 cents per share, lower than its previous guidance of 12-17 cents per share. L Brands now anticipates fourth-quarter fiscal 2013 earnings to be approximately $1.60 per share compared to its earlier forecast of $1.67 to $1.82 and American Eagle now expects its fourth-quarter fiscal 2013 earnings to dovetail with the lower-end of previously provided guidance range of 26 cents to 30 cents a share.

Consumer spending environment was not very convincing and bargain hunters went from one shop to another to grab the best deal.

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