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GuruFocus has detected 4 Warning Signs with Ascena Retail Group Inc $ASNA.
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Ascena Retail Group Inc (NAS:ASNA)
Gross Profit
$4,018 Mil (TTM As of Jan. 2017)

Ascena Retail Group Inc's gross profit for the three months ended in Jan. 2017 was $946 Mil. Ascena Retail Group Inc's gross profit for the trailing twelve months (TTM) ended in Jan. 2017 was $4,018 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Ascena Retail Group Inc's gross profit for the three months ended in Jan. 2017 was $946 Mil. Ascena Retail Group Inc's revenue for the three months ended in Jan. 2017 was $1,748 Mil. Therefore, Ascena Retail Group Inc's Gross Margin for the quarter that ended in Jan. 2017 was 54.10%.

Ascena Retail Group Inc had a gross margin of 54.10% for the quarter that ended in Jan. 2017 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Ascena Retail Group Inc was 58.16%. The lowest was 38.54%. And the median was 54.88%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Ascena Retail Group Inc's Gross Profit for the fiscal year that ended in Jul. 2016 is calculated as

Gross Profit (A: Jul. 2016 )=Revenue - Cost of Goods Sold
=6995.4 - 3066.7
=3,929

Ascena Retail Group Inc's Gross Profit for the quarter that ended in Jan. 2017 is calculated as

Gross Profit (Q: Jan. 2017 )=Revenue - Cost of Goods Sold
=1748.2 - 802.4
=946

Ascena Retail Group Inc Gross Profit for the trailing twelve months (TTM) ended in Jan. 2017 was 1016.7 (Apr. 2016 ) + 1041.3 (Jul. 2016 ) + 1014 (Oct. 2016 ) + 945.8 (Jan. 2017 ) = $4,018 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Ascena Retail Group Inc's Gross Margin for the quarter that ended in Jan. 2017 is calculated as

Gross Margin (Q: Jan. 2017 )=Gross Profit (Q: Jan. 2017 ) / Revenue (Q: Jan. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=946 / 1748.2
=54.10 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Ascena Retail Group Inc had a gross margin of 54.10% for the quarter that ended in Jan. 2017 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Ascena Retail Group Inc Annual Data

Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14Jul15Jul16
Gross_Profit 5845585769791,6531,8482,5772,6602,6693,929

Ascena Retail Group Inc Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
Gross_Profit 6956626756389039681,0171,0411,014946
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