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Dress Barn Ups Guidance as Sales, Market Share Grow

Dress Barn (DBRB) upped its fiscal-year earnings guidance from $1.20 to $1.30 per share, to $1.35 to $1.45 per share based on improving performance at its stores. Executives at the retailer's recent investor conference said they expect that momentum to continue longer, though, as the company's three chains pick up market share.

The expectations come after Dress Barn acquired Tween Brands earlier this year for $157 million. The deal gave it 905 Justice stores, which target girls from seven to 14 years old, and marked a departure from Dress Barn's core consumer of women in their 20s and above, serviced by its 846-store namesake chain and 734-location Maurice's line, which it acquired in 2004.

According to David Jaffe, president and chief executive officer, Dress Barn and Maurice's are performing stronger than many of their competitors this year because they offer value that other chains don't while targeting the same age group. An extreme comparison is Dress Barn's year-to-date four-percent sales gain at stores open at least a year compared to 23-percent year-over-year declines at Ann Taylor (ANN) and Talbots (TLB).

Meanwhile, Maurice's, which caters to younger women inched up one percent so far this year, while Pacific Sunwear (PSUN) fell 20 percent and Abercrombie & Fitch (ANF) slumped 26%. The value proposition also works for Dress Barn in this demographic. "We think there's been a trade-down affect," Jaffe said during the company's investor conference.

Justice didn't fare so well on the sales end this year, as same-store sales decline two percent during the third quarter, which ended before the merger with Dress Barn. Still, executives are encouraged that market share for the chain increased this year to 7.3 percent in the space from 6.1 percent last year. Meanwhile, at JCPenney (JCP), management asserts, market share dropped from 7.4 percent to 6.4 percent during the same period. Walmart (WMT) and Target (TGT) are the leaders in Justice's space.

Despite this growth in sales and market share, the company is conservative on new-store growth. Dress Barn's growth will remain flat in the coming year, while Maurice's will increase 3.5 percent. Plans aren't yet laid out for Justice. "In this market, we want to make sure that we're getting real estate that's going to stand the test of time," Jaffe said.

Dress Barn image from Flickr user rhoadeecha.

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