Maurices comparable-store sales fell 9% in fiscal Q4. Image source: Ascena Retail Group Inc.

What happened

Shares of Ascena Retail Group Inc. (ASNA) were down 28.6% as of 1:00 p.m. Tuesday after the company announced disappointing fiscal fourth-quarter 2016 results.

So what

Consolidated comparable sales declined 4% year over year, as a 1% comparable-sales increase at Lane Bryant was more than offset by declines of 4% at Justice, 9% at Maurices, 7% at Dressbarn, and 5% at Catherine's. And though ANN was acquired in the first quarter of fiscal 2016 last year -- so it wasn't included in the reported consolidated figure -- ANN's comps would have fallen 6% based on data from its pre-acquisition period, bringing consolidated comparable sales declines to 5%.

"Fiscal 2016 was a challenging year for Ascena, characterized by a highly competitive selling environment and significant store traffic headwinds," explained Ascena Retail Group CEO David Jaffe. "While we are seeing good customer demand during peak periods, off-peak demand has been inconsistent, and fourth quarter financial performance fell well below our expectations."

Now what

The market was equally unimpressed by Ascena's forward guidance, which calls for total company sales of $6.9 billion to $7.0 billion, assuming a decline in comparable sales of 1% to 2%. That should translate to adjusted earnings before interest taxes, depreciation, and amortization (EBITDA) of $635 million to $650 million and adjusted earnings per diluted share in the range of $0.60 to $0.65. By comparison, analysts' consensus estimates predicted Ascena would call for higher fiscal 2017 revenue of $7.17 billion and adjusted earnings of $0.83 per share.

To be fair, Jaffe also noted the ongoing turnaround at Justice is bearing fruit, with operating margin in the middle of the guidance range Ascena provided last quarter. And Ascena's integration of ANN is progressing "well," with synergies and cost savings ahead of plan. What's more, Ascena is seeing positive early indications for growth in demand from its recently launched omni-channel platform at Justice.

However, while Ascena might well be positioning itself for stronger results going forward, I would prefer to continue waiting on the sidelines until we see more tangible signs of that strength materializing. In the end, given Ascena's significantly weaker-than-expected results in an admittedly challenging retail environment, it's no surprise to see investors taking a big step back today.