Will Ascena Stand Up to Abercrombie?

On Wednesday, Ascena Retail Group (ASNA) will release its latest quarterly results. With retailers having faced a tough winter, however, can Ascena buck the trend and post more promising earnings than some of its peers have?

Ascena isn't a well-known name, but shoppers are familiar with its Dress Barn and Lane Bryant stores. With a big controversy having hit the apparel-retail space during the quarter, Ascena actually stands in a strong position to take full advantage of one of its competitor's missteps. Let's take an early look at what's been happening with Ascena over the past quarter and what we're likely to see in its quarterly report.

Stats on Ascena

Source: Yahoo! Finance.

Are Ascena's earnings ascending this quarter?
Analysts have been fairly optimistic in recent months about Ascena's earnings prospects, having held their April-quarter estimates steady but boosting their full-year fiscal 2013 calls by $0.03 per share. The stock has positively soared, rising by more than 20% since late February.

Much of the gains in Ascena's stock came after its earnings report in early March, in which the company managed to do better than investors had expected on both the top and bottom lines. Ascena's CEO said that he expects tough conditions to continue in the industry, but the company's moves to cut costs and a nice boost in Internet sales have borne fruit in its financial results.

More recently, though, Ascena got handed a golden opportunity by Abercrombie & Fitch (ANF 5.74%). Abercrombie posted horrible results for its first quarter, with same-store sales plunging 15% driven by bad inventory management. Contributing to Abercrombie's bad news was the resurfacing of a 2006 interview with CEO Mike Jeffries, in which he offered what many see as a dubious justification for the company's not offering plus-sized clothing for women. For Ascena's Lane Bryant, which is arguably the best-known plus-sized fashion brand, the opportunity to cash in on negative publicity from Abercrombie is huge.

Still, a long winter posed challenges for Ascena and its peers. Chico's (CHS) plunged last week after falling short of expectations, with the miss coming largely because of weather-related issues that led shoppers not to want to buy warmer-weather fashions during the quarter. Ann's (NYSE: ANN) Ann Taylor stores cited the weather as the reason it boosted promotional discounts at its Loft stores. The same trends might well pose the same trouble for Ascena.

In Ascena's quarterly report, pay close attention to how the company decides to tackle the Abercrombie issue. With such a golden opportunity to take a stand for its Lane Bryant brand, Ascena needs to show investors it has what it takes to play hard in this competitive industry.

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