ASNA Ascena Retail Group Inc

Ascena Retail Group Inc., which recently closed on its deal to buy Ann Inc., swung to a loss in its July quarter amid a big write-down on its Lane Bryant brand and tumbling sales at its Justice brand.

Still, both profit and revenue edged in above Wall Street expectations when backing out special items.

Ascena is one of the largest women's clothing retailers with brands such as Dressbarn and Justice. Last month, it closed on its deal to buy the parent company of Ann Taylor and Loft in a deal valued at $2 billion.

The bottom line in the latest quarter was hurt by a $306 million write-down on its Lane Bryant brand and $50 million the company set aside for class-action litigation involving pricing at its Justice line.

Meanwhile, sales excluding newly opened stores fell 2% in the quarter, helped by 12% growth in e-commerce. At its Justice brand, comparable store-sales tumbled 17%, offsetting 8% sales growth at its Maurices brand and 3% increases at the Catherines and Lane Bryant brands.

"We are executing against controllable factors, mindful that traffic continues to be challenging," said Chief Executive David Jaffe in a news release.

In all, for the quarter ended July 25, Ascena reported a loss of $323.4 million, or $1.98 a share, compared to a profit of $15.7 million, or 10 cents a share, a year earlier.

Excluding the write-down and other special items, per-share earnings fell to 6 cents from 13 cents a year earlier.

Revenue fell 1.1% to $1.17 billion.

Analysts polled by Thomson Reuters had forecast 5 cents a share in earnings on $1.16 billion in revenue.

Gross margin narrowed to 54.5% from 54.7% amid merchandise issues at Justice and Dressbarn.

For the newly-started fiscal year, Ascena forecast earnings, excluding items, of 75 cents to 80 cents on revenue of $7.3 billion to $7.4 billion.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

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(END) Dow Jones Newswires

September 16, 2015 09:25 ET (13:25 GMT)

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