Dress Barn Inc. (DBRN) Price Target Raised

Analysts at Raymond James (NYSE: RJF) have raised the FY10 and FY11 EPS estimates and price target for Dress Bern Inc. (NASDAQ: DBRN).

Dress Barn announced that 100% of its debt holders tendered their convertible notes to the offer made on December 23, 2009. The purchase of outstanding convertible notes will eliminate $4.2 million in interest expense in FY10 and will also have a positive impact on EPS of $0.03. With the completion of transaction, Dress Barn’s management expects to have cash and investments of $250 million.

Analysts believe that the move to purchase convertible notes is a wise use of excess cash as it will eliminate related interest expenses and further dilution of shares. The same- store sales at Dress Barn were up 10% ahead of analysts’ estimate of 7.2% for the holiday period. Analysts have raised EPS estimate for FY10 based on same-store sale increase of 5.5% and an operating margin of 8.5%. Analysts expect EPS for FY10 to be $1.50 as against their previous estimate of $1.45.

Analysts have also raised the EPS estimate for FY11 from $1.84 to $1.95 reflecting a same-store sales growth of 2.1% and an operating margin of 9.5%. Raymond James has an Outperform rating for Dress Barn Inc. The price target has been raised to $30 from $29.