Ahead of the Bell: Women's apparel

An analyst on Monday said tight inventory control is helping merchandise margins for women's apparel retailers.

JPMorgan analyst Brian J. Tunick wrote in a note to investors that after meeting with the management of Chico's FAS Inc., Christopher & Banks Corp., Coldwater Creek Inc. and Dress Barn Inc., he believes the group is better positioned to weather a difficult economic environment.

Women's apparel retailers have been among the hardest hit as consumers cut back discretionary spending amid rising food and gas prices and declining home values.

"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," Tunick wrote.

He noted that Coldwater Creek was one of the first to cut inventory levels, beginning last year, and inventory is now down more than 15 percent per square foot, which has helped the company to sell more items at full price.

He rates Chico's and Dress Barn "Neutral" and Coldwater Creek and Christopher & Banks "Overweight."