We are investigating Ascena Retail Group, Inc. (ASNA) (“Ascena” or the “Company”) for potential violations of the federal securities laws. On May 18, 2015, Ascena issued a press release announcing that it had entered into a definitive merger agreement with ANN Inc. (“ANN”), under which Ascena would acquire ANN for a combination of cash and stock (the “ANN Acquisition”).
On September 19, 2016, Ascena filed a Form 10-K for the fiscal year ended July 30, 2016 with the U.S. Securities and Exchange Commission. The Form 10-K reported goodwill related to ANN in the amount of $733.9 million, a reduction of $225.7 million. On this news, which indicated that the ANN Acquisition was experiencing problems, Ascena’s stock price fell $2.43 per share, or 29.93%, to close at $5.69 per share on September 20, 2016. On May 17, 2017, Ascena issued a press release revising its third quarter and full year fiscal 2017 sales and earnings outlook, advising investors that “[t]he specialty retail sector is in a period of unprecedented secular change that is disruptive to traditional business models, and we believe operating conditions in our sector are likely to remain challenging for the next 12 to 24 months.” Ascena further noted that the Company would be taking an impairment charge, but failed to quantify the amount. On this news, Ascena’s stock price fell $0.76 per share, or 26.95%, to close at $2.06 per share on May 18, 2017. Then, on June 8, 2017, Ascena issued a press release detailing its third quarter financial results. The Company reported a GAAP loss of $5.29 per diluted share compared to net earnings of $.08 per diluted share for the same period in the prior year. The press release further stated that “[T]he loss in the current quarter includes a non-cash pre-tax impairment charge of $1.324 billion (after tax impact of $5.22 per diluted share) to write-down a portion of the Company’s goodwill and other intangible assets.”