Lane Bryant’s stock plummets after disappointing sales

For Wall Street, betting on the plus-size fashion market can be treacherous.

Shares of Ascena Retail Group, whose chains include Lane Bryant and its smaller plus-size operation, Catherine's, plummeted 17 percent Tuesday, their biggest one-day drop since 1987, after the company disclosed disappointing sales and profits.

Results were dogged partly by sluggish trends at Lane Bryant, the nation's biggest plus-size chain, where a multiyear turnaround effort has yet to materialize.

Lane Bryant's second-quarter comparable sales dipped 2 percent to $284.3 million amid inventory snafus and lackluster demand, the company said.

That's despite the fact that plus-size women are among the fastest-growing shopping demographics in the US, fueling a market for larger apparel sizes that grew 3 percent last year to nearly $18 billion.

"We have yet to see sustained evidence of market improvement, and as a result, are maintaining a conservative outlook as we enter the fall season," Ascena CEO David Jaffe said, warning that full-year results will miss analysts' expectations.

Ascena shares lost $2.78 to close at $13.75, their lowest levels in nearly four years.

The woes at Ascena aren't just because of problems in the plus-size market.

Indeed, most of the recent disappointment was chalked up to shortfalls at the company's tween-focused Justice chain.

Still, the results highlight challenges that retailers have experienced catering to plus-size apparel shoppers.

At Lane Bryant, results are being squeezed by "weak traffic, markdowns and lack of inventory depth in key opening-point price categories," FBR Capital Markets analyst Susan Anderson wrote in a research note.

In the language of retail, "opening-point price categories" typically means bargain-priced basics.

Indeed, critics note that higher-priced designs, a controversial mainstay at Lane Bryant, can be a tough sell for plus-size shoppers, who tend to focus on value.

As if to prove the point, Catherine's, a lower-priced chain, saw its comparable sales surge 7 percent during the quarter, to $91.1 million.

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