We laugh at the convoluted excuses that company managements tap to explain away poor performance from time to time. For example, bothKrispy Kreme (NYSE: KKD) and Panera (Nasdaq: PNRA) have pointed to the low-carb craze as reasons that their sales have weakened in the last year. I've noted this before, but craze or no craze, there are way too many Ham Commandoes wandering around for me to believe that a sudden fitness trend has truly gripped the nation.
Be that as it may, the favorite reason -- especially for retailers -- to call upon for a poor performance is the weather. We shouldn't simply assume that these are all dodges: I have no doubt that Wendy's (NYSE: WEN) really has been harmed by the murderous hurricane season this year. (Wendy's didn't bother to blame low-carb fads, noting that its own cult-inspiring doughnut chain, Tim Horton's, had "excellent results.")
Dress Barn (Nasdaq: DBRN), a value-oriented women's apparel chain, turned in its fourth-quarter 2004 earnings yesterday and held true to form by noting that its second-half results were impacted by "a number of external factors, including high energy prices, weather, and ongoing geopolitical uncertainties." Economic factors, naturally, do have impacts, but I have a hard time thinking that women avoided shopping over deep concerns about the ongoing problems in Sudan. Besides, Dress Barn, like its larger rival TJX (NYSE: TJX), has a bit of a countercyclical element in its sales: When things are uncertain, wouldn't it make sense that people would tend to patronize value-oriented stores?
It doesn't matter that much, but I'd be willing to throw garlands at the company that stood up and said, "Wow, our decisions regarding fashion trends did not work out this year. We will do better."
Dress Barn reported earnings of $13.5 million, or $0.44 per share, up from an $8 million loss last year. Last year's results were impacted by a $32 million pre-tax litigation charge, which obviously skewed results. The fourth quarter of 2004 had some tailwinds, including an extra week. Management said in its conference call that it was disappointed that Dress Barn managed to beat its same-store sales comparables by only 1% over 2003 but said that it believed that its focus on product differentiation was paying off.
Most heartening for Dress Barn shareholders is that the company continues to aggressively repurchase its own stock, having retired some 100,000 shares in August alone. Dress Barn's board reaffirmed that the company was authorized to spend as much as $50 million more to buy back shares, which the company intends to do on an opportunistic basis. Here's to hoping that the company doesn't stop just because the temperature drops below 50 degrees, or something.
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Bill Mann owns none of the shares mentioned in this article.
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