Dress Barn reports record 4Q earnings

Dress Barn, Inc. (NASDAQ - DBRN) -- a leading national specialty retailer of apparel for women and tween girls operating under the dressbarn, maurices and Justice names -- announced record 4th Quarter earnings and its 2010 fiscal results today, in the following release:

Dress Barn, Inc. (NASDAQ - DBRN) today reported sales and earnings results for its fiscal fourth quarter and fiscal year ended July 31, 2010. Sales and earnings results for the fiscal fourth quarter and fiscal year 2010 periods included fourteen and fifty-three weeks, respectively, while the same periods in fiscal year 2009 included thirteen and fifty-two weeks, respectively.

Net earnings for the fiscal fourth quarter increased to $42.0 million, or $0.52 per diluted share, compared to recast GAAP net earnings of $25.6 million, or $0.40 per diluted share for the fourth quarter of fiscal 2009. The company's fourteenth week net earnings for the fourth quarter of fiscal 2010 were approximately $0.05 per diluted share. The company noted that results for the fourth quarter of fiscal 2009 have been recast to include non-cash, imputed interest from the adoption of Accounting Standards Codification (ASC) 470-20 as further described below.

Net earnings on a non-GAAP basis increased to $37.9 million, or $0.47 per diluted share, compared to net earnings for the fourth quarter of 2009 of $24.8 million, or $0.38 per share. During the fourth quarter of fiscal 2010, the company incurred a total of $0.9 million of pretax charges for certain items that management believes are not indicative of ongoing operations compared to pre-tax charges of $6.3 million in the prior year fourth quarter. The company also recorded a tax benefit of $4.8 million during the fourth quarter of fiscal 2010 and $5.0 million during the prior year fourth quarter due to the reversal of certain tax liabilities that are no longer required.

The Company believes it is valuable for users of the Company's financial statements to be made >aware of the non-GAAP financial information as such measures are used by management to evaluate the operating performance of the Company on a comparable basis. Accordingly, a GAAP to non-GAAP reconciliation of results is provided later in this release.

Net sales for the fourteen-week fiscal fourth quarter ended July 31, 2010 increased 78% to $710.9 million compared to $398.9 million for the thirteen-week fiscal fourth quarter ended July 25, 2009. The overall increase was primarily due to the inclusion of Justice sales of $245.6 million. Consolidated comparable store sales for Dress Barn, Inc. increased 7% for the thirteen-week period ended July 24, 2010 compared to the thirteen-week period ended July 25, 2009. The company's fourteenth week net sales were approximately $56 million.

By division, net sales for dressbarn increased 11% to $282.3 million, compared to $253.7 million last year, with a comparable store sales increase of 5%.

Net sales during this quarterly period for Justice were $245.6 million, with comparable store sales increasing 10%. SG&A expenses for the fiscal fourth quarter were $209.9 million, or 29.5% of sales, compared to $113.6 million, or 28.5% of sales in the prior year fourth quarter. A expenses on a non-GAAP basis were $209.0 million, or 29.4% of sales, compared to $107.3 million, or 26.9% of sales in the prior year's fiscal period. The increase in the SG&A rate of 100 basis points on a GAAP basis and 250 basis points on a non-GAAP basis was primarily due to the inclusion of Justice, which had a slightly higher SG&A rate, increased incentive compensation costs due to significantly better-than-planned earnings results and increased marketing costs.

Operating income for the fiscal fourth quarter was $59.8 million, or 8.4% of sales compared to $34.8 million, or 8.7% of sales in the prior year fourth quarter. On a non-GAAP basis operating income increased to $60.7 million, or 8.5% of sales compared to $41.1 million, or 10.3% of sales in the prior year fourth quarter. The decrease in operating income as a percent of sales was primarily due to the normally lower volume seasonal performance of Justice.

Fiscal Year 2010 Results

Net earnings for the fiscal year 2010 increased to $133.4 million, or $1.73 per diluted share, compared to recast GAAP net earnings of $66.6 million, or $1.06 per diluted share for the fiscal 2009. The Company's fiftythird week net earnings for the 2010 fiscal year were approximately $0.05 per diluted share. Interest expense in both periods includes non-cash, imputed interest recorded in accordance with our adoption of ASC 470-20.

Net earnings on a non-GAAP basis increased to $140.0 million, or $1.82 per diluted share for fiscal 2010, compared to net earnings for fiscal 2009 of $65.2 million, or $1.03 per diluted share. During fiscal 2010, the Company incurred $17.5 million of pretax charges for certain items that management believes are not indicative of ongoing operations compared to pretax charges of $5.3 million last year. The Company also recorded a tax benefit of $4.8 million during fiscal 2010 and $5.0 million during the prior fiscal year due to the reversal of certain tax liabilities that are no longer required. A GAAP to non-GAAP reconciliation of these results is provided later in this release.

For the fiscal year, by division: net sales for dressbarn increased 8% to $982.0 million with comparable store sales increasing 6%. Net sales for maurices increased 16% to $680.7 million with comparable store sales increasing 6%. Net sales for Justice were $711.9 million since the merger date of November 25, 2009, with comparable store sales increasing 17% during this period.

Expenses for the fiscal year were $690.2 million, or 29.1% of sales, compared to $422.4 million, or 28.3% of sales in the prior fiscal year. SG&A expenses on a non-GAAP basis were $678.5 million, or 28.6% of sales, compared to $417.1 million, or 27.9% of sales in the prior fiscal year. The increase in the SG&A rate of 80 basis points on a GAAP basis and 70 basis points on a non-GAAP basis was due to the inclusion of Justice, which had a slightly higher SG&A rate, increased incentive compensation costs due to significantly better-than-planned earnings results and increased marketing costs.

Operating income for the fiscal year was $217.5 million, or 9.2% of sales, compared to $105.0 million, or 7.0% of sales in the prior fiscal year. On a non-GAAP basis, operating income increased to $229.2 million, or 9.7% of sales, compared to $110.3 million, or 7.4% of sales in the prior fiscal year. This increase as a percentage of sales is primarily due to improved gross profit.

Notes:

. Dress Barn, Inc., operates 2,477 stores. dressbarn stores offer casual, career and special occasion fashion apparel and accessories at value prices for women ages 35-55, operating 833 stores in 47 states. maurices stores offer casual and career apparel and accessories at great values to the fashion-conscious woman, ages 17-34 with a 20-something attitude, and operate 757 stores in 44 states. Justice stores offer trend-right apparel and accessories at value prices for tween girls ages 7-14 and operate 887 stores in 46 states and Puerto Rico.

"We were also extremely pleased with our record performance for the fiscal year ended July 31, 2010; particularly given the more difficult economic environment. Sales for the year rose nearly 13% to $667 million, with comparable stores sales growth of over 6%. Operating income for the year was a record $89.8 million, or 13% of sales, up $29.5 million, or 49% from last year. Our store growth was up 5% for the year, gaining additional market share with the opening of 39 new stores. We will continue to invest in new store growth, with approximately 35 new stores projected for the coming year. maurices currently operates 757 stores, in 44 states."