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What: Shares of clothing-store operator Ascena Retail Group climbed 12% today after its quarterly results and guidance topped Wall Street expectations.
So what: The stock has slumped in recent months on concerns over slowing growth, but a second-quarter beat -- adjusted EPS of $0.26 on revenue of $1.24 billion versus the consensus of $0.23 and $1.23 billion -- coupled with reaffirmed full-year guidance naturally eases some of those worries. While the weak economy continues to weigh on same-store sales, a 27% spike in e-commerce sales, along with improved gross margins, suggests that management is weathering the economic storm quite well.
Now what: For the full year, management maintained its adjusted EPS forecast of $1.20-$1.30, versus the average analyst view of $1.24. "We expect the challenging environment to continue and have adjusted our sales, promotion, and inventory plans accordingly," CEO David Jaffe said. "These actions, combined with strong expense controls and our acceleration of productivity programs, give us confidence in our ability to achieve our full-year 2013 earnings expectations despite the market condition." With the stock still well off its 52-week highs and trading at a forward P/E of 12, there might even be some upside left to profit from that operating improvement.
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The article Why Ascena Retail Shares Surged originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Ascena Retail Group. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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