DBRN The Dress Barn, Inc. (MM)

The Dress Barn, Inc. -- Fourth Quarter Sales Increase 48% to $307.1 Million -- -- Fourth Quarter Diluted Earnings Per Share Increase 140% to $1.08 -- The Dress Barn, Inc. (NASDAQ - DBRN), today announced sales and earnings results for its fourth fiscal quarter and fiscal year ended July 30, 2005. Net sales for the thirteen-week period ended July 30, 2005, increased 48% to $307.1 million compared to the prior year's level of $208.0 million. The increase was driven by the inclusion of results from maurices, which was acquired on January 2, 2005, and a comparable store sales increase of 6% for the quarter. The Company achieved stronger results despite an additional week of sales in the year-ago quarter, which contributed $11.7 million to last year's fourth quarter sales results. Net earnings for the thirteen-week period ended July 30, 2005 increased 143% to $33.6 million, or $1.08 per diluted share, compared to $13.8 million, or $0.45 per diluted share in the prior year's fourteen-week period. There were certain items in both the current and prior year's fourth quarter that skew the year-over-year comparison. Earnings in the current year's fourth quarter were favorably impacted by an after tax gain of approximately $22.8 million, or $0.73 per diluted share, due to the reversal of a litigation reserve. Also during the fourth quarter, the Company recorded certain additional charges of approximately $3.0 million, or $0.10 per share, primarily related to the write-off of unamortized bank fees from the repayment of its $100 million term loan and consultant fees in connection with Sarbanes-Oxley compliance. Excluding these items, this year's fourth quarter earnings would have been approximately $13.8 million, or $0.45 per diluted share. Earnings results in the prior year period were favorably impacted by a $3.8 million after tax contribution for the extra reporting week and the reversal of tax reserves. These items increased earnings per share by approximately $0.12. Excluding the impact of these items, last year's earnings would have been approximately $10.0 million, or $0.33 per diluted share. David R. Jaffe, President and Chief Executive Officer, commented, "We are very pleased with our results for the fourth quarter, which put a strong finish on a truly transformative year for The Dress Barn, Inc. The acquisition of maurices, which is integrating smoothly and performing very well, has given us new opportunity for growth not only in sales, but also through the creation of synergy which we expect to lead to continued improvements in our profitability." Mr. Jaffe continued, "We will continue to transition our Company to be a strong competitor. We will push forward with new store growth for maurices, which is the leading small market specialty store for youthful fashion. We will also continue to make improvements to our dressbarn brand, which includes significant improvements in merchandising and marketing." Mr. Jaffe concluded, "We are very pleased with the strong cash flow generation we are experiencing. The reduction of debt will again enable us to pursue a variety of strategic alternatives for the development of our business going forward. We believe that, as a result, we are in a strong position to continue to generate above average returns on invested capital and we are committed to delivering value to our shareholders both in the short term and well into the future. Full-Year Results Net sales for the fifty-two week period ended July 30, 2005 increased 33% to $1 billion compared to $754.9 million reported for the fifty-three week fiscal period ended July 31, 2004. Comparable store sales increased 5% for the fiscal year and include the operations from maurices as of January 2, 2005. Net earnings for the fiscal year ended July 30, 2005 increased 70% to $52.6 million, or $1.72 per diluted share. This compares to $30.9 million, or $1.03 per diluted share as reported for the fifty-three week period ended July 31, 2004. This year's earnings, excluding the impact of the previously noted items, would have been approximately $36.2 million, or $1.18 per diluted share. Excluding the favorable impact of the extra reporting week and the reversal of the previously noted tax reserves, last year's earnings would have been approximately $27.1 million, or $0.90 per diluted share. The Company will conduct a conference call on October 11, 2005 at 9:00 a.m. Eastern Time to review its fourth quarter financial results. The conference call will be webcast and can be accessed via the company's website at www.dressbarn.com. The dial-in number is (617) 213-8054 and the passcode is 14693168. A replay of the call will be available until November 11, 2005 by dialing (617) 801-6888; the access code is 94619854. ABOUT THE DRESS BARN, INC. The Dress Barn, Inc. (NASDAQ - DBRN), is a leading national specialty apparel retailer offering quality career and casual fashion apparel through its dressbarn and maurices brands. As of October 1, 2005, the Company operated 787 dressbarn stores in 45 states and 500 maurices stores in 39 states. For more information, please visit www.dressbarn.com and www.maurices.com. FORWARD-LOOKING STATEMENTS Certain statements made in this press release and the conference call which are not historical in nature are "forward-looking statements", within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. The Company does not undertake to publicly update or review its forward-looking statements even if experience or future changes make it clear that our projected results expressed or implied will not be achieved. Detailed information concerning a number of factors as they relate to dressbarn's operations that could cause actual results to differ materially from the information is readily available on our most recent report on Form 10-K/A for the year ending July 31, 2004 and Form 10-Q for the quarter ending April 30, 2005. Such factors as they relate to maurices include risks applicable to the retail apparel business in general and risks which may be applicable to maurices' business. In addition, there are risks associated with the integration of two businesses. The conference call will be recorded on behalf of The Dress Barn, Inc. and consists of copyrighted material. It may not be re-recorded, re-produced, transmitted or re-broadcast, in whole or in part, without the Company's express written permission. Accessing the call or the rebroadcast represents consent to these terms and conditions. Participation in the call serves as consent to having any comments or statements made appear on any transcript, broadcast or rebroadcast of this call. -0- *T The Dress Barn, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings Amounts in thousands except per share amounts Fourth Quarter Ended --------------------------------- July 30, July 31, 2005 2004 --------- --------- (13 (14 Weeks) Weeks) Net sales $307,052 100.0% $207,975 100.0% Cost of sales, including occupancy and buying costs 187,722 61.1% 125,181 60.2% --------- --------- Gross profit 119,330 38.9% 82,794 39.8% Selling, general and Administrative expenses 86,414 28.1% 57,547 27.7% Depreciation expense 10,549 3.4% 6,107 2.9% Litigation charge (37,726) -12.3% 861 0.4% --------- --------- Operating income 60,093 19.6% 18,279 8.8% Interest income 585 0.2% 437 0.2% Interest expense (5,527) -1.8% (509) -0.2% Other income 382 0.1% 382 0.2% --------- --------- Earnings before provision for income taxes 55,533 18.1% 18,589 8.9% Provisions for income taxes 21,952 7.1% 4,783 2.3% --------- --------- Net earnings $33,581 10.9% $13,806 6.6% ========= ========= Earnings per share: Basic: $1.12 $0.47 ========= ========= Diluted: $1.08 $0.45 ========= ========= Weighted average shares outstanding Basic: 30,027 29,609 --------- --------- Diluted: 31,023 30,449 --------- --------- The Dress Barn, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings Amounts in thousands except per share amounts Fiscal Year Ended ----------------------------------- July 30, July 31, 2005 2004 ----------- --------- (52 (53 Weeks) Weeks) Net sales $1,000,264 100.0% $754,903 100.0% Cost of sales, including occupancy and buying costs 621,656 62.1% 472,198 62.6% ----------- --------- Gross profit 378,608 37.9% 282,705 37.4% Selling, general and Administrative expenses 286,751 28.7% 212,477 28.1% Depreciation expense 34,457 3.4% 23,197 3.1% Litigation charge (37,726) -3.8% 3,329 0.4% ----------- --------- Operating income 95,126 9.5% 43,702 5.8% Interest income 1,735 0.2% 2,204 0.3% Interest expense (12,627) -1.3% (1,959) -0.3% Other income 1,526 0.2% 1,526 0.2% ----------- --------- Earnings before provision for income taxes 85,760 8.6% 45,473 6.0% Provision for income taxes 33,200 3.3% 14,541 1.9% ----------- --------- Net earnings $52,560 5.3% $30,932 4.1% =========== ========= Earnings per share: Basic: $1.76 $1.05 =========== ========= Diluted: $1.72 $1.03 =========== ========= Weighted average shares outstanding Basic: 29,785 29,413 ----------- --------- Diluted: 30,579 30,120 ----------- --------- The Dress Barn, Inc. and Subsidiaries Condensed Consolidated Balance Sheets Dollars in thousands July 30, July 31, ASSETS 2005 2004 --------- --------- Current Assets: Cash and cash equivalents $42,434 $15,141 Restricted cash and investments 100 38,661 Marketable securities and investments 85 122,700 Merchandise inventories 167,643 116,912 Deferred tax asset - 14,845 Prepaid expenses and other 12,923 8,898 --------- --------- Total Current Assets 223,185 317,157 --------- --------- Property and Equipment 232,698 163,204 Intangible Assets 111,243 - Goodwill 132,566 - Other Assets 16,553 8,955 --------- --------- TOTAL ASSETS $716,245 $489,316 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable- trade $107,702 $66,776 Accrued salaries, wages and related expenses 35,209 21,349 Litigation accrual - 36,128 Other accrued expenses 35,237 24,247 Customer credits 12,849 8,970 Income taxes payable 92 5,548 Deferred tax liability 3,612 - Current portion of long-term debt 1,089 1,033 --------- --------- Total Current Liabilities 195,790 164,051 --------- --------- Long-Term Debt 155,900 31,988 Deferred Rent and Other 44,194 40,319 Long-Term Deferred Tax Liability 7,233 - Shareholders' Equity 313,128 252,958 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $716,245 $489,316 ========= ========= *T