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Justice inclusion drives Q1 performance of Dress Barn
22
Nov '10
Dress Barn Inc reports record sales and earnings results for its fiscal first quarter ended October 30, 2010.

Fiscal First quarter results

Net earnings for the fiscal first quarter more than doubled to $48.0 million, or $0.60 per diluted share, compared to net earnings of $21.7 million, or $0.33 per diluted share for the first quarter of fiscal 2010.

Net earnings on a non-GAAP basis increased to $50.5 million, or $0.63 per diluted share, compared to net earnings for last year's first quarter of $25.0 million, or $0.38 per share. During the first quarter, the Company incurred a total of $4.1 million of pretax charges for certain items that management believes are not indicative of ongoing operations compared to pre-tax charges of $4.5 million in the prior year first quarter.

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 first quarter increased 77% to $713.3 million compared to $404.1 million for the prior year first quarter. The overall increase was primarily due to the inclusion of Justice sales of $290.6 million. Consolidated comparable store sales for Dress Barn, Inc. increased 4% for the quarter compared to last year.

By division, net sales for dressbarn decreased 3% to $240.2 million, compared to $248.0 million last year, with a comparable store sales decrease of 3%. Net sales for maurices increased 17% to $182.5 million, compared to $156.1 million last year, with a comparable store sales increase of 9%. Net sales during the first quarter for Justice were $290.6 million, with a comparable store sales increase of 8%.

Selling, general and administrative expenses for the first quarter were $207.0 million, or 29.0% of sales, compared to $113.8 million, or 28.2% of sales in the prior year first quarter. SG&A expenses for the first quarter included Justice SG&A expenses of $81.0 million. SG&A expenses on a non-GAAP basis were $203.4 million, or 28.5% of sales, compared to $109.3 million, or 27.0% of sales last year.

The increase in the SG&A rate of 80 basis points on a GAAP basis and 150 basis points on a non-GAAP basis was due to on-going costs for our investment in several key integration projects, increases in marketing spend, an increase in the provision for incentive compensation and some deleveraging from dressbarn's results.

Operating income for the first quarter was $77.7 million, or 10.9% of sales compared to $37.8 million, or 9.4% of sales in the prior year first quarter. On a non-GAAP basis operating income increased to $81.8 million, or 11.5% of sales compared to $42.3 million, or 10.5% of sales last year. The increase in operating income as a percent of sales was primarily due to gross margin increases associated with the strong performance of maurices and Justice.

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