Last quarter, women's retailers benefited from a trend-right assortment of "wear now" merchandise. Christopher & Banks (NYSE:CBK), Ann Taylor (NYSE:ANN), and Dress Barn (NASDAQ:DBRN) were able to capitalize on this trend. And those that weren't able to, like Chico's FAS (NYSE:CHS), felt the impact with lower-than-expected results. Let's check up on Dress Barn's latest figures to see what's selling now.
Fiscal 2007 first-quarter sales were 12% higher, with same-store sales contributing a solid 7% increase. According to management during the conference call, casual wear again drove customer traffic. Also, the cooler September led to stronger than expected sweater sales.
Gross margins remained stable, as Dress Barn was able to pass on much of its merchandise to the customer at full price. However, operating margins expanded to 12.4% of net sales from 11.6% in the year-ago period. The company's ability to leverage operating costs with expanding revenues fueled the margin increase.
The net result of the top-line gains and healthy margins is that diluted earnings per share increased 20% to $0.40. This was achieved despite diluted shares outstanding increasing 9.4% year over year.
Going into the holiday season, the greatest concern Dress Barn management has is not if women will be shopping, but rather where they will shop. There are no shortages of options. In addition to those named above, Limited (NYSE:LTD) and Coldwater Creek (NASDAQ:CWTR) -- among many others -- will offer a stiff challenge to Dress Barn.
Despite the competition, management is optimistic that the company's momentum will continue into the second quarter. This is more good news for shareholders, whose shares are already up 12% in recent trading.
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Fool contributor Jeremy MacNealy has a player rating of 97.29 and is ranked 391st out of 14,382 participants at Motley Fool CAPS, the Fool's new stock-rating community that's open to everyone. He has no financial interest in any company mentioned. The Motley Fool has a disclosure policy.
