Surprise! Dresses lead the way for Dress Barn (Nasdaq: DBRN ) in the third quarter. Really, it comes as no surprise that dresses are the hot merchandise item this year -- Ann Taylor (NYSE: ANN ) , Ralph Lauren Polo (NYSE: RL ) , Guess? (NYSE: GES ) , G-III Apparel (Nasdaq: GIII ) , and others are all cashing in on the category.
During Dress Barn's third-quarter earnings conference call, management indicated that the dress business is "surpassing expectations." All types are doing well, but the performance of knit dresses and cotton sundresses is particularly noteworthy. In terms of colors, the ones that seem to be attracting the most attention are blacks, whites, and reds.
Dresses helped the women's-apparel retailer achieve 2% comparable same-store sales growth. On the surface, low-single-digit comps growth doesn't seem impressive, but placed in context of a weak sales environment that plagued much of the retailing industry during April, these results aren't all that bad.
It appears the positive momentum is carrying over into the fourth quarter. Because of strong sales in May, the company expects to exceed its previous earnings forecast. For the full year, management now expects the company to earn from $1.38 to $1.40 per share, up from the previous range of $1.30 to $1.35.
Overall, Dress Barn's performance looks healthy. About the only item that might raise an eyebrow of concern is the inventory at Maurices, which jumped 15.5% on a square-footage basis compared to year-ago levels. But shareholders should note that Maurices will be introducing an entirely new apparel category next month -- female plus-sizes -- as well as an all-new apparel look in July. Given the timing of these initiatives, the ramp-up in inventories makes sense.
Management attributes Dress Barn's recent success to its "fashion-right merchandise." There's little doubt that its fashion-right merchandise is fueling the stock's trend-right performance.
Can Dress Barn remain fashion-relevant? Given its track record, I wouldn't bet against it.
More fashionable Foolishness:
- The latest quarter wasn't as kind to Christopher & Banks (NYSE: CBK ) .
- And Limited (NYSE: LTD ) suffered from weakening sales at Victoria's Secret.
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