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Deep Discounts Do More Damage to Lands’ End, G-III Apparel Profit Falls

Ascena Retail Group

Ascena Retail Group (ASNA) said Tuesday that an “unseasonably cold spring” contributed to a 4 percent decline in total comparable store sales in the third quarter of fiscal 2016. The Mahwah, New Jersey-based specialty retailer, which sells clothing and accessories under the Ann Taylor, Loft, Lou & Grey, Justice, Lane Bryant and Dressbarn banners, among others, reported an increase in sales from $1.15 billion to $1.67 billion, driven by the acquisition of Ann Inc. However, that integration also caused earnings to tumble from last year’s $0.15 per diluted share to $0.08 per diluted share. To that end, the company has cut its full-year revenue outlook to around $7.1 billion and adjusted earnings per share to between $0.67 and $0.70.

Lands’ End

Deep discounting meant that preppy clothier Lands’ End (LE) continued its downward spiral in the first quarter, despite introducing new products, marketing programs and website enhancements. The Dodgeville, Wisconsin-based company reported a loss of $5.8 million compared to a profit of $1.7 million last year. Revenue was $273.4 million in the three months ended Apr. 29, compared to $299.4 million in the year-ago period, as direct-to-consumer sales decreased 8.4% to $232.2 million and retail sales declined 10.4% to $41.2 million. The company attributed the latter to a 7.1% fall in same-store sales and a smaller number of Lands’ End Shops at Sears. Inventory also rose 8.9% to $309.9 million from $284.6 million.

G-III Apparel

A strong wholesale season for Calvin Klein and Tommy Hilfiger in the first quarter of fiscal 2017 helped G-III Apparel (GIII) come back from a poor end to the prior year. Net sales increased 6 percent to a record $457.4 million, compared to $433 million a year ago, but the company’s retail businesses did not perform to plan and profit fell from $6.8 million to $2.8 million. With that being said, G-III is confident it can turn that around in the second quarter and achieve net income of between $7 million and $9 million.

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