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Why Ascena Shares Dropped

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What: Shares of women's apparel retailer Ascena Retail Group (NASDAQ: ASNA  ) were falling today by as much as 13%, after the company reported disappointing holiday sales.

So what: The holiday shopping season is the biggest time of year for retailers, sometimes bringing in as much as 40% of yearly revenue, and a number of industry stocks are off today on news of a Christmas slump. Earlier reports had said fears of the fiscal cliff kept some shoppers home. Ascena, the parent of Lane Bryant and other chains, cut its outlook for the fiscal year to an EPS of $1.30 to $1.40, from $1.45 to $1.55, as the company has had to mark down unsold merchandise. Same-store sales at company stores actually dropped 2% in November and December, though online sales grew 30% during that period.

Now what: It seems like the worst is probably over for Ascena. The company projected modest growth in comps this spring at 3%-5%, so it seems like the reason for lowering guidance was the poor holiday season. Now that tax cuts have been preserved for most Americans, perhaps retail shopping and consumer confidence will return to normal levels. I'd expect the stock to stabilize after today's drop.

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  • Report this Comment On January 11, 2013, at 8:14 AM, midia wrote:

    Taxes have not been preserved for most Americans. The tax hikes that will hit most Americans will likely have a negative effect on future spending across the retail landscape.

    "The so-called payroll tax is scheduled to bounce back up to 6.2 percent this year from 4.2 percent in 2011 and 2012, amounting to a $1,000 tax increase for someone earning $50,000 a year."


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9/28/2016 11:31 AM
ASNA $5.52 Down -0.10 -1.69%
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