Home > Stock Analysis

Dress Barn Offers Dressed Up Q4

Posted: Sep 23, 2008 13:24 PM by Glenn Curtis

Tickers in this Article: DBRN, JCP, KSS

I have to hand it to women’s apparel retailer Dress Barn (Nasdaq:DBRN). In spite of some stiff competition and consumers' seeming reluctance to spend money, it managed to turn in a pretty decent fourth quarter.

Get Free Stock Analysis By Email

Dress Barn Beats On Revenue And EPS
In the period that ended July 26, the New York-based company earned $22.1 million or 34 cents a share. That’s a big decline from the $33.6 million or 48 cents a share it earned in the comparable period the year before. Meanwhile, on the revenue side of the equation it generated $382.3 million, which was a small pop from the $379.9 million it booked in the comparable period last year.

You’re probably thinking that on a year-over-year basis, that doesn’t look so hot. I’ve certainly seen better, too. However, I view it as good news for two reasons:

First and foremost, the Street was looking for earnings per share of 30 cents and revenue of $379.2 million, so it could attract a good deal of retail and institutional attention. The size of the “beat” may also cause the sell side to ratchet up its full-year estimates. (For more on analyst expectations, read Analyst Recommendations: Do Sell Ratings Exist?)

Second, this news could cause some institutions to buy the stock in the weeks ahead. Why? Again, a better-than-expected quarter is an attractive feature these days, plus the stock is trading near the upper end of its 52-week range. It could look great for window-dressing purposes.

The company's guidance of $1.23 to $1.28 a share in fiscal 2009 adds to the allure. The Street had reportedly been looking for $1.24 a share.

Comps Were Decent – Considering
Dress Barn's comparable same-store sales results also piqued my interest. In the period, they declined 2%. What’s so great about that? For one, it was going up against a difficult comparison. In the comparable period last year, it generated a positive 5%. That puts things in a better perspective.

Second, the comps appeared favorable given what some other big retail players have been turning in. For example, take Kohl’s (NYSE:KSS) Q2 in August, when it reported a comp store decline of 4.6%. Meanwhile, J.C. Penney (NYSE:JCP) turned in a 4.3% decline in its Q2 comps.

The Flip Side
While it turned in what I think was a decent quarter (considering) and its outlook sounds decent, there are certainly no guarantees.

Bottom Line
All things considered, I was impressed by both Dress Barn's bottom-line beat and its comparable store sales results.

Learn to pick out your next investments on your next trip to the mall in our related article, Analyzing Retail Stocks.

By Glenn Curtis

Glenn Curtis started his career in the 1990s as an equity analyst for a regional firm in New Jersey. There, he covered companies in the technology, entertainment, and gaming industries. Curtis has since worked as a financial writer at a series of both web and print publications, including TheStreet.com and Registered Rep Magazine. He has held his series 6,7,24, and 63 securities licenses.

Rate this Article: Your Rating: Overall Rating: Vote Now!

MORE STOCK ANALYSIS