Dress Barn shares rise after co. raises forecast

AP News
Posted: Nov 20, 2009 3:06 PM

Shares of Dress Barn Inc. climbed Friday, a day after the company raised its yearly profit estimate above analysts' forecasts.

The stock rose $1.25, or 6.1 percent, to $21.77 in afternoon trading.

CL King & Associates analyst Scott Krasik reiterated his "Strong Buy" rating. He added that even though the company raised its guidance, it was still a conservative estimate since there will be an extra week of shopping that will add 5 cents per share to profit.

"Inventories are very clean, which should drive a large gross margin increase in Q2 and more modest increases in the back half of the year," Krasik told investors in a research report.

Given the company's expenses, he said that "modest sales growth would put earnings per share above the high end of management's guidance range."

Next week, the company's proposal to buy Tween Brands Inc. will go to a vote by Tween shareholders. Dress Barn agreed in June to buy Tween in a stock-for-stock deal.