The Dress Barn, Inc. (DBRN)
Q2 2010 Earnings Call Transcript
March 1, 2010 4:30 p.m. ET

Executives

David R. Jaffe – President, Chief Executive Officer and Director
Armand Correia – Senior Vice President and Chief Financial Officer

Analysts

Scott Krasik – BB&T Capital Markets
Edward Yruma – KeyBanc Capital Markets
Samantha Panella - Raymond James & Associates
Elizabeth Montgomery - Longbow Research LLC
Brian – SunTrust Robinson Humphrey
Joel Labowicz – The Dress Barn, Inc.

Presentation

Operator

Good afternoon, ladies and gentlemen and thank you for standing by. My name is Glen and I will be your conference facilitator today. Welcome to Dress Barn Inc.’s second quarter fiscal 2010 financial results conference call. At this time, all participants are in listen-only mode. Later the company will hold a question-and-answer session and instructions will follow at that time. As a reminder, this webcast and conference call is being recorded and will be available for replay later today. Information on how to access this replay is available in the financial results news release issued earlier today.

I would like to remind participants that remarks made by management during the course of this call may contain forward-looking statements about the company’s results and plans. These are subject to risks and uncertainties that could cause the actual results and implementation of the company’s plans to vary materially. These risks are referenced in today’s news release, as well as in the company’s SEC filings. Thank you.

And now, I would like to turn it over to Mr. David Jaffe, President and CEO. Please proceed.

David R. Jaffe

Good afternoon. Thank you for joining us to discuss our results for our second fiscal quarter ended January 23, 2010. With me today is Armand Correia, our CFO.

I am pleased to report we’ve had another strong quarter. We’ve done well financially as Armand will detail in a moment with solid earnings and a continued strong balance sheet. We’ve made progress operationally with good management of our working capital and the beginning of a thoughtful integration process for the Justice business.

Finally, we remained on a sound strategic path to grow our business and drive great value to consumers and therefore, to our shareholders.

Here are some of the highlights from the quarter. Revenues in the quarter were up 73% versus the prior year. This was driven by the Justice merger of course but also by 6% comp for dressbarn and a 5% comp at maurices.

Operating income on a non-GAAP basis in the second quarter was also strong growing to $47.8 million from a loss of $2.4 million in the prior year second quarter. Again, the drivers were the inclusion of the Justice business and continued strong contributions from the maurices business.

Earnings per share adjusting out a number of one-time charges for merger and debt extinguishment costs came in at $0.37 per share compared to a loss of $0.03 per share last year. This exceeds our expectations and we are very pleased with the financial performance of our business.

All in all this has been a very strong quarter for the company. While the overall retail environment is best described as stabilizing we’ve been pushing ahead. Our concepts are capturing market share by delivering great value to consumers.

I’d like to touch briefly on each of our three concepts. Dressbarn has continued to benefit from a trade on effect as consumers sought better price and value in the shop. At the end of the quarter, we were operating 837 dressbarn stores versus 834 at this time last year. Our unit economics continued to improve as a 6% comp increase we saw in the second quarter is above our tipping point for operating leverage.

Our average price per unit sold increased by 7% and this combined with a 1% increase in units per transaction increased our average transaction by 8% which offset our 2% decrease in sales transactions.