Ascena Downgraded to Strong Sell - Analyst Blog
January 21 2013 - 7:50AM
Zacks
Zacks Investment Research downgraded Ascena Retail Group
Inc. (ASNA) to a Zacks Rank #5 (Strong Sell) on Jan
16.
Why the Downgrade?
Ascena Retail Group has witnessed sharp downward estimate revisions
after reporting disappointing holiday comparable store sales
results and a lowered fiscal 2013 outlook. Shares of this women’s
apparel retailer have been on a downtrend since Sep 21, 2012 and
given its expected negative earnings growth rate in the upcoming
quarter, it has more downside left.
On Jan 10, Ascena Retail Group reported comparable store sales
results for the combined months of November and December, otherwise
referred to as the holiday sales season.
Total comparable store sales of the company in the holiday period
ended Dec 29, 2012, declined 2%, driven by lower-than-expected
holiday sales. However, including e-Commerce comps growth of 30%,
the company’s comps increased 1% for the two-month holiday
period.
Driven by weak holiday sales results, the company lowered its
earnings per share guidance for fiscal 2013 ending Jul 27, 2013, to
$1.20 to $1.30, from its previous guidance of $1.45 to $1.55.
However, the company projected comparable store sales to increase
in the 3% – 5% range going into the spring season. E-commerce comps
are expected to increase about 25% for the same period.
Such constrained comps trends together with lowered earnings
guidance pulled down the Zacks Consensus Estimates for fiscal 2013
and fiscal 2014 in the last 30 days. The Zacks Consensus Estimate
for fiscal 2013 decreased 18.2% to $1.26 per share. For fiscal
2014, most of the estimates were revised downward over the last 30
days, lowering the Zacks Consensus Estimate by 15.3% to $1.60 per
share.
Other Stocks to Consider
Not all retailers are performing as poorly as Ascena Retail Group.
The specialty retail stocks with a favorable Zacks Rank that are
performing well and are worth considering include
Abercrombie & Fitch Co. (ANF), Citi
trends Inc. (CTRN) and DSW Inc. (DSW).
These stocks carry a Zacks Rank #1 (Strong Buy).
ABERCROMBIE (ANF): Free Stock Analysis Report
ASCENA RETAIL (ASNA): Free Stock Analysis Report
CITI TRENDS INC (CTRN): Free Stock Analysis Report
DSW INC CL-A (DSW): Free Stock Analysis Report
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