Top Performer for Thurs: Dress Barn (DBRN)

Shares of Dress Barn, Inc. (DBRN) are up more than 9% today on heavy volume of 3 million shares, compared to the average of around 1.14 million.

The company has made the Zacks #1 Rank Top Performers List for Thursday after announcing a merger agreement with Tween Brands, Inc. (TWB). (By the way, shares of TWB have soared about 30% in response to the deal.)

Earnings estimates for DBRN have been steady for the past month, but remain higher than 2 months ago. Analysts currently expect $1.05 for the fiscal year ending July 2009, which is 14% higher than 60 days ago.

Meanwhile, the consensus for the fiscal year ending July 2010 is $1.23, or approximately 17% atop this fiscal year's outlook. The past 2 months have seen an almost 13% advance in the guidance.

A Move to Diversify

Specifically, the deal announced today calls for a subsidiary of DBRN to merge with TWB in a stock-for-stock transaction valued at about $157 million. The deal is expected to close in the fourth quarter of calendar year 2009.

The combined company has generated more than $2.4 billion in net sales and operates 2,465 stores, on a trailing 12-month basis.

DBRN, a leading specialty apparel retailer for women, seems especially interested in TWB's Justice concept, which is a leading specialty retailer for tween girls.

"The Justice concept, which offers an attractive mix of well-priced fashion for girls ages 7 to 14, will diversify and complement our existing business," said DBRN President and CEO David R. Jaffe.

Solid Fiscal Q3 Report

But even before the merger's announcement, DBRN was a Zacks #1 Rank, stemming from a strong fiscal third-quarter report in late May.

The company earned 39 cents per share in the quarter, eclipsing the consensus of 31 cents by nearly 26%. Net sales advanced 7% to $375.7 million from $352.6 million a year earlier. Same-store sales were up 3%.

But the biggest reason behind the company's positive trend in earnings estimates stems from its guidance for the fiscal year. The company raised its outlook to a range of $1 to $1.05, compared to its previous target of 70 cents to 85 cents.

DBRN is 1 of 12 companies from the retail - apparel/shoe industry on today's 223-stock Zacks #1 Rank List. Other companies from this space on the list include Buckle, Inc. (BKE), Gap, Inc. (GPS), J. Crew Group, Inc. (JCG) and Monday's top performer Children's Place (PLCE).

Read the full analyst report on PLCE

Read the full analyst report on ASNA

Read the full analyst report on GPS

Read the full analyst report on BKE

Read the full analyst report on JCG