Ascena Retail Group, parent company of Lane Bryant, Dressbarn and Justice, may have just reported same store sales growth across all its formats and achieved Thanksgiving weekend sales objectives, but president and CEO David Jaffe remains cautious in his outlook for the remainder of the holiday season.
As so many other retailers have noted in recent weeks, Jaffe said this year’s highly competitive, promotional and compressed holiday season makes it difficult to know how the next few weeks will play out, despite the company’s recent performance.
“We were pleased that our top line momentum continued into the first quarter, with all of our brands generating positive total comps,” Jaffe said when the company released results for its first quarter ended October 26. “We also continued to make progress on our strategic priorities during the quarter, including our synergy initiatives, which will position the business for long term growth. We expect the retail environment to be challenging for the foreseeable future, with a highly promotional holiday season. We have taken a conservative approach to planning inventory, and have developed promotional contingencies to ensure we end the season clean.”
The operator of 3,900 stores under the Lane Bryant, Cacique, Maurices, Dressbarn, Catherines, Justice and Brothers banners said its first quarter sales increased 5% to nearly $1.2 billion and same store sales across all formats increased to an aggregate total of 2%. Throw in a 27% comp increase for e-commerce operations which now account for 9% of total company sales and the consolidated comp increase was 4%.
Profits on an adjusted basis fell slightly to 36 cents a share from 39 cents a share due to increase expenses associated with growth and infrastructure investments, according to the company.
Ascena’s sales performance wasn’t enough to alter the company’s performance expectations during the holiday season or its outlook for the full fiscal year ending in July. Total comps are expected to rise in the low single digits and there will be a nominal increase in square footage as expected store openings in the range of 180 to 190 units are offset by the closing of 130 to 140 stores.
As Jaffe noted in response to a question during the company’s conference call, he feels good about the company’s on plan performance over the weekend, but it was just one weekend.
“We still have three weeks to go, and the numbers are pretty big for the next three weeks. So while [Thanksgiving weekend] is certainly the kickoff to the holiday shopping season, time has taught us over and over again that it's not necessarily a harbinger of what we're going to see for the next three weeks,” Jaffe said. “So we're cautiously optimistic about the rest of the season.”