Ascena Retail Group (NASDAQ: ASNA ) was one of the first clothing retailers to report after the Black Friday weekend. With its report, we get one of the earliest glimpses into the holiday season, along with names such as American Eagle Outfitters (NYSE: AEO ) and Pacific Sunwear of California (NASDAQ: PSUN ) that also reported.
Ascena Retail Group reported fiscal first-quarter results on Dec. 2. Sales inched up 5% to $1.197 billion, while same-store sales hopped 4%. Earnings per share slipped 8% to $0.36 due to increased depreciation expenses and "planned investments in SG&A." All five of Ascena Retail Group's brands saw sales increases. The biggest bright spot was its e-commerce sales, up 27% to $106 million.
When commenting on the operating environment, CEO David Jaffe said it is "challenging for the foreseeable future," though he is still confident that Ascena Retail Group will see profitable growth. Maybe his macroeconomic concerns just mean the other guys will suffer and not his company. For the fiscal year ending July 2014, the company is guiding for earnings per share of $1.25-$1.30. Analysts think Ascena Retail Group is sandbagging; they have a $1.32 average estimate.
CFO Dirk A. Montgomery stated, "Looking ahead to our second quarter and the holiday season, November got off to a bit of a slow start. However, sales for Black Friday week improved from the November trend, and we were in line with our expectations." Sounds like a bit of a mixed bag, but overall encouraging for the holiday shopping season even though the "pre-season" was weak.
Jaffe also said, "We felt good about the Black Friday weekend." Still, he cautioned that one weekend doesn't make the entire holiday shopping season with three key weeks still to go. He is "cautiously optimistic" regarding Ascena Retail Group's sales trends from now until Christmas.
Ascena Retail Group plans to give more details on how the holiday shopping season went in a presentation in early January. However, we all want to try to figure it all out sooner. What are some of the other retailers in fashion saying?
What American Eagle Outfitters and Pacific Sunwear of California had to say
American Eagle Outfitters last reported on Dec. 6. The company got beaten up a bit last quarter. Total revenue dropped 6% to $857 million, while same-store sales fell 5%. Adjusted EPS nosedived by 54% to $0.19. It was not a good quarter for American Eagle Outfitters.
CEO Robert Hanson blamed the poor performance on an "intensely promotional North American retail landscape." He further warned, "We expect conditions to remain challenging, and we're planning accordingly."
Hanson also said, "Although business conditions remain volatile and promotional, we saw sequential sales improvement during the week of Black Friday." However, virtually every single retail company saw sales improvement during the week of Black Friday. It's not exactly shocking news.
Pacific Sunwear of California reported its results on Dec. 5. Total calendar-adjusted net sales inched up 1% while same-store sales dropped by 1%. Adjusted earnings were around break-even compared to a $0.02 loss last year. It was the 7th consecutive quarter with a same-store sales increase in a row for Pacific Sunwear. The only metric that really stood out was that November saw a 6% increase in same-store sales.
Pacific Sunwear guided for a same-store sales increase between 1% and 5% for the holiday quarter. After a 6% increase in November, this seems to suggest that December may be on the weak side. Pacific Sunwear in part attributes the strong November and Black Friday sales to the unusually cold weather, which the company states in its conference call that it always helps its sales. This may be simply due to a spike in overall mall traffic. .
Foolish final thoughts
While the economy continues to struggle, companies such as Ascena Retail Group are still able to grow sales and make decent profits despite struggles by others such as American Eagle Outfitters. Fools may want to consider putting Ascena Retail Group on their radar. When a company like this is able to hold its head successfully above water during challenging times, it could potentially be a home-run during better times.
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