Deb Dons Profit Increase

PHILADELPHIA-Teen-apparel retailer Deb Shops Inc. saw a 38.2% jump in profit during its second quarter ended July 31. According to the company’s quarterly results, Deb Shops’ gross profit increased to $29 million compared to $25.7 million a year ago.

During the company’s Q2 earnings call Thursday, chief financial officer Barry Susson attributed Deb’s growth to strong full-price selling of the company’s key classic offerings including jeans, capris, prairie skirts, denim and hooded jackets, tank and hooded tops, dresses and shoes. Year-to-date, Susson said the average transaction size has increased 4.7%.

The company posted a net-sales increase of 4.3% to $76 million compared to $72.8 million in the second quarter a year ago; a rise of 4.5% in same-store sales; and comparable store sales increase of 5.7% from the same period last year. Second quarter net income increased to $6.6 million compared to $4.6 million in the second quarter, while diluted earnings per share increased to 46 cents from 34 cents in last year’s second quarter.

For the remainder of the year, the company intends to maintain its three key initiatives, which include: Increasing the penetration of plus-size departments in Deb stores; opening and remodeling stores; and continuing to control expenses.

During the second quarter, the company augmented its plus-size business, introducing the department in six stores for a year-to-date total of 154 stores or 48% of Deb stores, up from 40% a year ago. By year-end, Susson said the company plans to further increase that amount to bring the department to half of all Deb stores.

Based on projected mid-single digit comparable store sales increases and by full-year net new store growth of between five and 10 stores, Deb Shops raised 2006 sales guidance to a range of $315 million to $320 million and increased the range of diluted earnings to $1.57 to $1.62. The company currently operates 326 specialty apparel stores in 41 states under the DEB and Tops ‘n Bottoms names.