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.