The Dress Barn Inc. (DBRN) recently reported fiscal 2010 first-quarter results. The company recorded a GAAP net income of $21.7 million, a growth of nearly 10% over GAAP net earnings of $19.7 million posted in the year-ago period. Excluding certain items, adjusted earnings per share came in at 37 cents, surpassing the Zacks Consensus Estimate [...]

(DBRN) Dress Barn Tops Expectations – Lifts Outlook

The Dress Barn Inc. (DBRN) recently reported fiscal 2010 first-quarter results. The company recorded a GAAP net income of $21.7 million, a growth of nearly 10% over GAAP net earnings of $19.7 million posted in the year-ago period. Excluding certain items, adjusted earnings per share came in at 37 cents, surpassing the Zacks Consensus Estimate by 12%, or 4 cents.

The company reported a 7.4% growth in net sales to $404.1 million during the quarter, compared to $376.4 million in the year-ago quarter. The growth was primarily driven by a 4% increase in same-store sales coupled with the addition of 47 stores in the last one-year period. In terms of divisions, same-store sales expanded by 5% in Dressbarn stores, while it grew by 4% in Maurices stores.

Dress Barn also stated that it expects the acquisition of Tween Brands Inc. (TWB), a specialty retailer focused towards preteen girls, to complete by November 25, 2009. Dress Barn announced in June this year that it has entered into an agreement to acquire Tween Brands in an all-stock deal.

Meanwhile, Dress Barn’s quarterly gross profit grew by 11.3% year over year to $163.8 million, while gross margin expanded by 140 basis points (bps) to 40.5%. The increase was primarily the result of higher merchandise margins at both Dressbarn and Maurices stores. Selling, general and administrative expenses, as a percentage of sales, increased by 90 bps to 28.2% primarily on account of acquisition related expenses. Accordingly, operating income recorded a growth of 17.0% year over year to $37.8 million, while operating margin increased by 80 bps to 9.4%.

At the end of the quarter, Dress Barn had cash and cash equivalents of $283.6 million, compared to $144.3 million in the year-ago period. Total inventories ended the quarter at $181.1 million, a decline of 3% from $187.1 million in the prior-year quarter. In terms of divisions, inventories dipped by 2% and 6% at Dressbarn and Maurices stores, respectively.

Moving forward, Dress Barn lifted its earnings guidance for the fiscal year ending July 2010, citing better-than-expected quarterly results. The company now expects earnings to range between $1.20 and $1.30 per share for the full fiscal excluding the impact of the Tween Brands deal, compared to the earlier prediction of $1.10 to $1.20 per share. The guidance is in-line with the Zacks Consensus Estimate of $1.27 per share, which has climbed 7 cents over the past week.

Dress Barn is a national specialty apparel retailer offering career and casual fashion apparel through its Dressbarn and Maurices brands. As of October 24, 2009, the company operated 846 namesake stores in 47 states and 734 Maurices stores in 44 states.
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I’ve been beefing up our bullish plays on the Watch List.

If we’re going to get more bullish I thought it would be a good time to look for some bullish premises so we don’t feel totally silly paying 20-year high p/e’s for the S&P 500.  Obviously, our main hope is that the stocks we buy will grow into their earnings so the next month’s worth of reports will be key.  The bar for corporate earnings is still set at very easy to beat levels yet, like this limbo playing child, when they announce their beats of very low expectations we’re going to get all excited and tell them how great they are doing.

The problem is, these are not kids who we hope may grow up one day to be President or CEOs of major companies. these ARE CEOs of major companies and they are being paid top salaries for top performance and we, the stock purchasing public, are paying top dollar for what should be SPECTACULAR performance, not beating 75% off last year by a nickel! 

When I am being asked to buy IBM back at it’s all-time high or AMZN or BIDU or AM, PALM, NFLX, PCLN, URBN, UHS, CERN, CREE, GMCR, CY, SWM, TRLG, BKE, etc - then their performance better look like this:  

Nothing against those particular companies, any individual company can be exceptional and beat the market but are the companies we’re buying really doing exceptional things or are have we just developed such ridiculously low expectations that we have been psychologically conditioned (and Wall Street firms employ armies of behavioral psychologists for a reason) to treat these stocks and the CEOs who run them like our children.  If your child was the child in the above picture and I asked you for $20 to see here show - you might pay it.  If it’s not your child though, would you even consider making an afternoon of it?  No, of course not, you want to see the cool fire guy at the top of his game and that is what you should expect from companies trading at or near all-time highs - NO LESS!

I love President Obama but he was just given a Nobel Prize simply for not being President Bush.  On Sept 17th, PALM announced that it lost 10 cents a share, not losing the 25 cents expected and gave lowered guidance for Q3.  The non-adjusted loss for PALM was their 9th consecutive…