This summary is based on the third quarter fiscal 2008 earnings call conducted by Dress Barn Inc. (DBRN: chart) on May 28, 2008.

Management:

- President and Chief Executive Officer: David Jaffe
- Chief Financial Officer: Armand Correia
- Chief Merchandising Officer for Dress Barn stores: Keith Fulsher
- Chief Merchandising Officer for Maurices stores: Lisa Rhodes

Key Investors Issues

- Sales rose marginally to $352.6 million from $347.9 million in 2007.
- Net earnings increased 8% to $24.9 million or 39 cents a share compared to $23.1 million or 33 cents a share in 2007.
- The firm reclassified $62 million of auction rate securities from short-term investments to long-term investments.

Year To Date Highlights:

- Net sales were $1.062 billion, an increase of 1% over $1.047 billion in the prior year.
- Comparable store sales decreased 3%.
- Net earnings decreased to $52.0 million or 81 cents from $67.6 million or 97 cents in 2007.

Third Quarter Highlights

Total sales increased 1% to $352.6 million, versus $347.9 million last year, while comparable store sales decreased 3%.

- Dress Barn stores decreased 5% overall to $216.8 million, versus $228.6 million last year, while comparable store sales decreased 6%.
- By region, the Northeast performed the best, while the Southeast including Florida and the West Coast had the weaker performances.
- Sales transactions decreased 6%, while average unit retail and units per transaction were flat to the prior year, resulting in average dollars the same as last year at $68.68.
- In contrast, Maurices quarterly sales increased a solid 14% to $135.8 million, versus $119.3 million in 2007 driven from new store growth of 12% year over year but also comparable store sales increase of 4%, driven in part by new plus size business.

Comparable store sales increased in all regions with the Northeast and the Midwest the strongest performers.

- In Maurices, average unit retail increased 6% and units per transaction increased 2.5%, resulting in an 8.5% increase in the average dollar sales to $48.54, more than offsetting the 7% traffic decline.
- Gross profit rate was 41.4%, up 40 basis points from last year due to good inventory management as the firm had lean inventories in both divisions.
- By division, gross profit for Dress Barn stores was 39.3%, down 70 basis points from last year’s 40% due to deleverage on buying and occupancy costs with the sales decline.
- Maurices stores came in at a strong 44.8%, up 190 basis points from last year’s 42.9%, driven by an increase in merchandise margins, a slightly higher mark-on and lower markdowns.

In absolute dollars, SG&A increased 1.5% despite an increase of 6% in the number of stores between Dress Barn stores and Maurices stores.

- Specific areas of good management included payroll costs by reacting to lower sales, reducing incentive costs, and reducing healthcare costs from the implementation of a new healthcare plan and a new service provider.
- The store payroll levels continue to be well managed and maintain a positive in-store customer experience.
- Depreciation expense was $12.4 million, or 3.4% of sales, as expected and primarily due to store growth and accelerated depreciation relating to store remodels and the write-off of obsolete IT hardware and software.

Operating income was $36.2 million, or 10.3% of sales, above last year’s $35.7 million, or the same 10.3% of sales.

- Dress Barn decreased 24% to $15.5 million or 7.1% of sales versus last year’s $20.4 million, or 8.9% of sales, while Maurices stores’ percentage was $20.8 million, or a strong 15.3% of sales, versus last year’s $15.4 million, or 12.9% of sales.
- Net interest income and expense came in more favorably than expected versus last year due to increased rates and levels of marketable securities.
- Net earnings increased 8% to $24.9 million or 39 cents a share, at 7.1% of sales, compared to $23.1 million or 33 cents a share, at 6.6% of sales in 2007.

Cash and marketable securities increased $40 million to $256 million and the firm reclassified $62 million of auction rate securities from short-term investments to long-term investments.

- It also recorded a temporary mark-to-market adjustment of $3.7 million through equity.
- Total inventories at increased 3.5% to $175 million primarily due to Maurices’ store growth.
- Despite good control throughout the quarter, reacting to the shortfall in sales has become increasingly more challenging for Dress Barn stores.
- Maurices stores’ total inventory was $55 million, an increase of 11%, which supports the net store growth of 12%.
- CapEx was $44 million and is estimated at $60 million for the fiscal 2008 year, well below the previous guidance of $73 million, with the $13 million decrease representing the timing of key IT projects from fiscal 2008 to 2009.

Update on Merchandise- Dress Barn:

- The firm was able to achieve a healthy gross margin in a very difficult environment by controlling its inventory levels and flow of new products.
- Wear to work was off plan, but is trending fairly well with strength in blouses, fashion knitwear and jackets.
- Dress, which had a record performance in the year-ago quarter, was off substantially to plan than last year.
- The casual sportswear business was also weak with summer staples such as capris, shorts, tees, and casual wovens all trending below plan.
- The jewelry and accessory business achieved modest increases versus last year.

Key initiatives to improve the business include to further leverage focus on special occasional apparel under the Dress Barn collection label.