NEW YORK — The Dress Barn, the value-priced apparel specialty store chain, said Wednesday its fourth-quarter profits were better than expected because of strong merchandise margins and tight expense controls.
However, the Suffern, N.Y.-based retailer, which operates 767 stores, said fall sales are not trending as favorably.
For the quarter ended July 27, income skyrocketed 62.6 percent to $13.4 million, or 36 cents a diluted share, compared with income of $8.3 million, or 22 cents a diluted share, for the year-ago quarter. Sales extended 5.3 percent to $186.7 million from year-ago sales of $177.3 million, but were flat on a comparable-store basis.
“The earnings performance was primarily driven by strong merchandise margins and tight expense control,” Elliot S. Jaffe, chairman, said in a statement. “We also benefited from easier sales and earnings comparisons from the prior year, which continue into our current season.”
While noting he was pleased with how the year ended, Jaffe said early fall selling has been disappointing with recently reported August comparable-store sales decreasing 2 percent. The trend has continued into September.
“We continue to operate our business conservatively, given the weak economy and the highly promotional retail environment,” Jaffe noted.
On an afternoon conference call, David Jaffe, president and chief executive, said DB is differentiated from its peers through its merchandise, which is now completely private labeled, customer service and marketing.
Keith?Fulsher, general merchandise manager, said the firm is offering more sportswear than ready-to-wear as well as more color-coordinated outfits. Other fall trends are sweaters and blouses as well as feminine treatments like lace and gauze and peasant tops.
DB also said its board approved the initiation of a tender offer to buy up to 8 million shares of outstanding stock. It said the repurchase will be conducted through a Dutch auction in which shareholders will be able to offer some or all of their shares at a price between $15 and $17 apiece. Dress Barn will determine the lowest price per share within the range of offers that will enable it to buy back the authorized shares. Chairman Jaffe said the company believed the stock was undervalued at current prices.
Shares closed up 4 cents, or 0.4 percent, to $11.29 in Wednesday trading on the Nasdaq. Shares of Dress Barn have traded as low as $9.63, reached last Sept. 21, and as high as $17.50, reached June 17. The company split its shares 2-for-1 on May 31.
In addition, DB announced the election of John Usdan as a new member of its board. Usdan is president of Midwood Management Corp.
For the year, income rose to $37.9 million, or $1.01 a diluted share, a 7.4 percent increase over income of $35.3 million in 2001. Sales increased 3.2 percent to $186.7 million from $177.3 million, but fell 2 percent on a comp basis.
The company’s fiscal 2002 and 2001 earnings per share were reduced by 11 cents and 20 cents, respectively, because of the operating costs of its catalog and e-commerce operations.