Zacks Investment Research downgraded
Ascena Retail Group Inc.
) to a Zacks Rank #5 (Strong Sell) on Jan 16.
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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
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.
Citi trends Inc.
). These stocks carry a Zacks Rank #1 (Strong Buy).