The Dress Barn Inc. (DBRN) recently posted fiscal 2010 second-quarter results. The company swung to a GAAP net income of $21.7 million, from a GAAP net loss of $1.8 million in the year-ago quarter. Excluding special items, adjusted earnings per share came in at 37 cents, which surged past the Zacks Consensus Estimate of 25 cents.
The company has a good track record of beating earnings expectations as it has topped the Zacks Consensus Estimate in each of the last 4 quarters with an average positive surprise of 23.6%, or 7 cents. This implies that Dress Barn’s earnings have surpassed the Zacks Consensus Estimate by 23.6% on an average over the last 4 quarters.
During the reported quarter, Dress Barn reported an impressive 73.1% growth in net sales to $594.1 million from $343.2 million in the year-ago quarter. The strong expansion was primarily driven by the acquisition of Tween Brands Inc. in Nov 2009, which operates Justice stores coupled with a 10% increase in same-store sales. In terms of divisions, same-store sales expanded by 6% in Dressbarn stores, while it grew by 5% in Maurices stores.
Dress Barn’s gross margin increased 630 basis points (bps) to 39.1%, while selling, general and administrative expenses, as a percentage of sales, reduced by 110 bps to 28.9% primarily due to the leveraging impact of higher same-store sales. Accordingly, the company recorded an operating profit of $43.1 million during the quarter, compared to an operating loss of $2.4 million in the year-ago period.
At the end of the quarter, Dress Barn had cash and cash equivalents of $252.3 million, compared to $164.5 million in the year-ago period. Long-term debt at the end of the reported quarter was $25.4 million, compared to $125.6 million in the prior year quarter.
Moving forward, Dress Barn raised its earnings guidance for the fiscal year ending July 2010. The company now expects earnings to range between $1.55 and $1.60 per share for the full fiscal, compared to the earlier prediction of $1.40 to $1.50. The guidance is in line with the Zacks Consensus Estimate of $1.58 per share, which increased by 6 cents in just the past week.
Dress Barn is a national specialty apparel retailer offering career and casual fashion apparel meant for women through its Dressbarn, Maurices and Justice brands. As of Jan 23, 2010, the company operated 837 namesake stores in 47 states, 739 Maurices stores in 44 states and 899 Justice stores in 45 states and Puerto Rico.
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