Dress Barn, Inc. (DBRN), the specialty clothing retailer, recently surprised on the Zacks Consensus Estimate for the second consecutive quarter as sales jumped 4% in the fiscal-fourth quarter.

On Sep 16, the company reported earnings per share of 39 cents, or 3 cents higher, than the Zacks Consensus Estimate. This was a 5 cent improvement over the fourth quarter of the prior year.

Out of the company’s two divisions, dressbarn and maurice stores, it was dressbarn that saw the better performance. Sales rose 6% to $253.7 million from $238.5 million in the fourth quarter of 2008. Same store sales jumped 4%.

Maurice stores grew sales by 1% to $145.2 million from $143.8 million a year ago. Same store sales fell 5% but new stores offset the decrease.

For the full fiscal year, comparable store sales were flat while net sales rose 3%.

The company is in the key value pricing end of the retail market. It is counting on the consumer’s quest for value to continue to generate increased sales in fiscal 2010.

It also expects to complete the merger with Tween Brands which will give the company an entryway into the tween specialty retail market and expand its demographic reach.

Company Guided Under Analysts’ View on 2010

Dress Barn provided its first look at fiscal 2010, forecasting earnings per share in the range of $1.10 to $1.20. This range does not include the Tween merger. The guidance will be updated after that transaction is completed.

The range was below the Zacks Consensus Estimate for the year which had called for $1.23. In the last week, the one covering analyst for the year lowered estimates to $1.20, or the high end of company’s guidance range. The first quarter Zacks Consensus Estimate also fell by a penny to 31 cents.

Value Fundamentals

Dress Barn is now a Zacks #2 Rank (buy) stock. It is a little cheaper than when I last reviewed it in June. The company now trades at 13.9x forward earnings compared to 14.12 last June. It has a price-to-book ratio of 1.73. Dress Barn also has a solid 1-year return on equity of 11.4%.

Zacks Investment Research
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