The Dress Barn Inc.’s fourth-quarter profits dropped by more than a third as rising expenses erased sales increases.
This story first appeared in the September 22, 2008 issue of WWD. Subscribe Today.
However, tightly managed inventories and strong sales at the company’s Maurices division helped Dress Barn beat analysts’ estimates.
Profits for the Suffern, N.Y.-based retailer declined 34.2 percent to $22.1 million, or 34 cents a diluted share, for the period ended July 26, from $33.6 million, or 48 cents a diluted share, for the same quarter in 2007. Net sales grew 0.6 percent to $382.3 million, compared with $379.9 million a year ago. Analysts polled by Yahoo anticipated earnings per share of 30 cents on revenue of $372.3 million.
Comparable-store sales fell 2 percent, versus the prior year’s increase of 5 percent.
By division, Dress Barn stores reported a 5 percent decrease in net sales, to $238.5 million from $251 million, while comps declined 2 percent. At Maurices stores, net sales gained 11.6 percent to $143.8 million, from $128.9 million, while comps rose 4 percent.
Overall, the cost of sales rose 7.1 percent to $231.3 million.
“While we have not been able to avoid the pressures of the marketplace, we have managed the business prudently and made a number of improvements to our operations and created a leaner, more responsive business model,” said David R. Jaffe, president and chief executive officer
Jaffe said Dress Barn is looking to remodel specific stores, as well as to open 100 stores, close 30 and finish fiscal 2009 with a store count of 1,575. The company ended the fiscal year with merchandise inventories of $187 million, down 5.2 percent from a year ago.
For the year, Dress Barn’s net declined 26.8 percent to $74.1 million, or $1.15 a share, versus $101.2 million, or $1.45 a share. Revenue was up 1.2 percent to $1.44 billion, from $1.43 billion.
Dress Barn stores saw a 5 percent decline in net sales to $887.6 million, from $934.8 million, and a 7 percent decrease in comps. Net sales for Maurices stores jumped 13.2 percent to $556.6 million, from $491.8 million, while comps grew 4 percent.