Earnings Preview: The Dress Barn

Sep.16.08 | About: Ascena Retail (ASNA)

The Dress Barn (DBRN) is expected to report Q4 earnings after market close Wednesday, September 17, with a conference call scheduled for 4:30 pm ET.

Guidance

Analysts are looking for a profit of 30c on revenue of $372.3M. The consensus range is 29c to 32c for EPS, according to First Call. In May, the company reaffirmed FY08 EPS guidance of $1.05 to $1.10 vs. First Call consensus of $1.10. Between the faltering economy, soaring food and gas prices, limited credit, slumping home prices and worries about jobs, shoppers remain unnerved. Instead of spending at department stores, consumers are flocking to wholesale clubs and discount apparel chains.

Analyst Views

After meeting with management in July, JP Morgan analyst Brian Tunicks said he believes the women's apparel group, hard hit as consumers cut back discretionary spending, is better positioned to weather a difficult economic environment. While overall traffic levels continue to be negative, tight inventory controls are beginning to translate to positive merchandise margins, a good indicator that the group is much better positioned even if the negative macro trends continue in the back half of 2008. Due to improved inventory management, Argus upgraded shares on September 2 to Buy from Hold.