ASNA Ascena Retail Group Inc

Shares of Ascena Retail Group Inc., owner of Ann Taylor and other women's apparel brands, dropped sharply Monday as the company's guidance for its new fiscal year missed expectations.

The retailer also said adjusted earnings for the latest quarter fell short of expectations, though it did report better-than-expected sales growth for the latest quarter.

The Mahwah, N.J. company's shares, already down 18% this year, fell 22% to $6.30 in after-hours trading.

For the fiscal year ending in July 2017, Ascena forecast per-share adjusted earnings of 60 cents to 65 cents and net sales of $6.9 billion to $7 billion. Analysts polled by Thomson Reuters expected profit of 83 cents a share and revenue of $7.17 billion.

For the three-month period ended July 30, Ascena reported net sales increased to $1.81 billion from $1.17 billion a year earlier, driven by the company's acquisition of the parent of the Ann Taylor and Loft chains in August 2015. Analysts expected revenue of $1.77 billion.

Comparable sales, which exclude Ann, dropped 4% as growth of 1% at Lane Bryant was offset by declines at Ascena's other legacy brands.

Chief Executive David Jaffe said that although Ascena is seeing good customer demand during peak periods, off-peak demand has been inconsistent and Ascena's performance in the latest quarter was well below its expectations.

Ascena, which owns several retail chains including Dress Barn and Lane Bryant, has traditionally been known for serving middle-aged and plus-size women. The company also operates the tween line Justice.

Like other retailers, the company has faced challenges from weaker customer traffic to its brick-and-mortar stores as more shoppers move online. Ascena also has been striving to turn around its Justice business by relying less on promotions, a move that had improved margin trends in recent quarters.

Over all, Ascena reported a profit of $13.8 million, or 7 cents a share, compared with a year-earlier loss of $323.4 million, or $1.98 a share. Excluding acquisition and integration-related expenses and other items, adjusted per-share earnings were 8 cents. Analysts expected profit of 16 cents a share.

Gross margin rose to 57.5% from 54.5%.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

September 19, 2016 17:45 ET (21:45 GMT)

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