The following discussion should be read in conjunction with our consolidated financial statements and related notes thereto included in this Annual Report on Form 10-K. Fiscal 2009 refers to the 52-week period ended July 25, 2009, fiscal 2008 refers to the 52-week period ended July 26, 2008, and fiscal 2007 refers to the 52-week period ended July 28, 2007. Fiscal 2010 refers to our 53-week period that will end on July 31, 2010.

Overview

This Management Overview section of Management's Discussion and Analysis of Financial Condition and Results of Operations provides a high-level summary of the more detailed information elsewhere in this annual report and an overview to put this information into context. This section is also an introduction to the discussion and analysis that follows. Accordingly, it omits details that appear elsewhere in this annual report. It should not be relied upon separately from the balance of this annual report.

We operate a chain of women's apparel specialty stores, operating principally under the names "dressbarn" and "dressbarn woman" and, since our January 2005 acquisition of Maurices Incorporated, "maurices." Our dressbarn stores are operated mostly in a combination of dressbarn and dressbarn woman stores, or Combo stores, which carry dressbarn and larger-sized dressbarn woman merchandise, as well as freestanding dressbarn and dressbarn woman stores. These stores offer in-season, moderate to better quality career and casual fashion at value prices. Our maurices stores are concentrated in small markets in the United States and their product offerings are designed to appeal to the apparel and accessory needs of the 17- to 34-year-old woman.

The retail environment remains very competitive and is subject to macroeconomic conditions. We expect to continue our strategy of opening new stores while closing underperforming locations. We expect to continue store expansion focusing on both expanding in our major trading markets and developing and expanding into new domestic markets. For fiscal 2010, we are currently projecting net square footage growth in the low single-digit percentage range.

Customer tastes and fashion trends are volatile and can change rapidly. Our success depends in part on our ability to effectively predict and respond to changing fashion trends and consumer demands, and to translate market trends into appropriate, saleable product offerings. If we are unable to successfully predict or respond to changing styles or trends and misjudge the market for our products or any new product lines, our sales will be lower and we may be faced with a substantial amount of unsold inventory. In response, we may be forced to rely on additional markdowns or promotional sales to dispose of excess or slow-moving inventory, which may have a material adverse effect on our financial condition or results of operations.

We consider comparable store sales to be an important indicator of our current performance. Comparable store sales results are important in leveraging our costs, including store payroll, rent and other operating costs. Positive comparable store sales contribute to greater leveraging of costs. Comparable store sales also have a direct impact on our total net sales, operating income and working capital.

We calculate comparable store sales based on the sales of stores open throughout the full period and throughout the full prior period (including stores relocated within the same shopping center and stores with minor square footage additions). If a single-format store is converted into a Combo store, the additional sales from the incremental format are not included in the calculation of same store sales. The determination of which stores are included in the comparable store sales calculation only changes at the beginning of each fiscal year except for stores that close during the fiscal year which are excluded from comparable store sales beginning with the fiscal month the store actually closes.

Management uses a number of key indicators of financial condition and operating performance to evaluate the performance of our business, including the following:

                                                                         Fiscal Year Ended

                                                       July 25, 2009        July 26, 2008        July 28, 2007
Net sales growth                                                 3.5 %                1.2 %                9.7 %
dressbarn comparable store sales                                 0.1 %               (6.6 )%               3.8 %
maurices comparable store sales                                 (1.3 )%               4.3 %                6.9 %
Total comparable store sales growth                             (0.4 )%              (2.9 )%               4.8 %
Cost of sales, including occupancy and buying
costs, excluding depreciation                                   61.5 %               61.3 %               59.0 %
SG&A as a percentage of sales                                   28.3 %               27.5 %               26.9 %
Square footage growth                                            3.9 %                5.2 %                5.0 %

Total store count                                              1,559                1,503                1,428

Diluted earnings per share                           $          1.11      $          1.15      $          1.45

Capital expenditures (in millions)                   $          58.4      $          66.1      $          63.0

We include in our cost of sales line item all costs of merchandise (net of purchase discounts and vendor allowances), freight on inbound, outbound and internally transferred merchandise, merchandise acquisition costs (primarily commissions and import fees), occupancy costs (excluding utilities and depreciation), and all costs associated with the buying and distribution functions. Our cost of sales may not be comparable to those of other entities, since some entities include all costs related to their distribution network including depreciation and all buying and occupancy costs in their cost of sales, while other entities, including us, exclude a portion of these expenses from cost of sales and include them in selling, general and administrative expenses or depreciation. We include depreciation related to the distribution network in depreciation and amortization, and utilities and insurance expenses, among other expenses, in selling, general and administrative expenses on the consolidated statements of operations.

Highlights

The dressbarn and maurices customers have both been negatively impacted by the continued slowdown in consumer spending in fiscal 2009. This has led to the implementation of significant inventory controls during the year to reduce the need for markdowns to control inventory levels. The dressbarn business improved in the second half of the fiscal year with trend-right merchandise and effective marketing programs. The maurices business was softer than expected as the macroeconomic slowdown affected our previously more resilient younger maurices customers.

During fiscal 2009, we continued three key strategic initiatives to help improve the dressbarn customer experience. The first was the Oracle Retail (Retek) merchandising system, which we began utilizing during the first quarter of fiscal 2008, for merchandising, the retail stock ledger and data warehousing (Phase I). This initiative is currently in Phase II, which enhances merchandise financial planning, allocation and invoice matching. The second initiative was Global Store, a new POS application, giving our stores greater functionality. This was piloted in stores in fiscal 2009, with a complete rollout expected to be completed during fiscal 2010. The third initiative was the implementation of an upgrade to our CRM system that will improve data analysis and the efficiency of our marketing efforts for both brands.

During fiscal 2009, we undertook four key strategic initiatives to help improve the maurices customer experience. The first was the rollout of our new décor developed in partnership with a third party design firm for new stores and remodels. The new décor was utilized as we continued our new store expansion with the opening of 49 locations to allow us to continue to grow our market share. The second initiative was Global Store, a new POS application, providing our stores greater functionality. This was piloted in stores in fiscal 2009, with a complete rollout targeted during fiscal 2010. The third initiative was investing in our DC packing area to allow us to support our store growth and significantly improve labor productivity. The fourth initiative was focused on continuing the maturation of our 14-24 (Plus Sizes) department.

In fiscal 2008, we introduced a new line of coordinates called YVOS ("Your Very Own Style"). Our YVOS brand is designed to be very stylish and fresh and it creates a bold fashion statement for work and play at an affordable price. This merchandise is priced 20% to 25% higher than current dressbarn merchandise due to more expensive fabrics, yarns, designs and trims. Our competitors offer similar styles that are 35% to 40% higher in price than YVOS. The YVOS line of coordinates is now in approximately 50% of our stores.

On June 24, 2009, we entered into an agreement pursuant to which one of our subsidiaries will merge with Tween Brands, Inc. in a stock-for-stock transaction. Under the terms of the merger agreement, each share of Tween Brands common stock will be exchanged for 0.47 shares of our common stock. Based on our stock price of $13.24 as of June 24, 2009 (the date of the agreement), this consideration would be equal to an aggregate equity value of $157 million. In addition, Tween Brands, Inc.'s outstanding bank debt will be repaid. This transaction, unanimously approved by each of Dress Barn, Inc.'s and Tween Brands, Inc.'s Board of Directors, is expected to close in the fourth quarter of calendar year 2009 and is subject to Tween Brands, Inc. stockholder approval and other customary closing conditions.

Results of Operations

We have two reportable segments, dressbarn (which consists of the dressbarn and dressbarn woman brands) and maurices. We believe that maurices is a reportable segment due to management's review of maurices' separately available operating results and other financial information used to regularly assess their performance for decision-making purposes. maurices is discussed separately in the following Management's Discussion and Analysis, as appropriate.

Fiscal 2009 Compared to Fiscal 2008

Net Sales:
                                                                             Fifty-Two Weeks Ended
                                                      July 25,                      July 26,
(Amounts in millions, except for % change amounts)        2009      % of Sales          2008      % of Sales       % Change

dressbarn                                            $   906.2            60.6 %   $   887.6            61.5 %        2.1 %
maurices                                                 588.0            39.4 %       556.6            38.5 %        5.6 %
Consolidated net sales                               $ 1,494.2                     $ 1,444.2                          3.5 %

Net sales for the fifty-two weeks ended July 25, 2009 increased 3.5% to $1,494.2 million from $1,444.2 million in the prior year. This increase was mainly driven by a 3.9% square footage increase offset by a comparable store sales decrease of 0.4%. The same store sales decrease was the result of several factors including decreased customer traffic to our stores and fewer customer transactions. We believe the decrease in the number of customer transactions was the result of the continuing economic challenges that are affecting a significant number of our customers.

During fiscal 2009, the dressbarn brand continued to be impacted by the slowdown in consumer spending, however, the dressbarn brand still managed to have positive comparable sales. The strongest comparable store sales for the fifty-two week period were in the midwest, mid-atlantic and northeast regions. The regions with the weakest comparable store sales were the northwest and southeast. The best performing departments were suit separates, outerwear, shoes and accessories. The weakest departmental performers were coordinates and casual bottoms.

For the maurices brand, fiscal 2009 comparable sales were down slightly in a very challenging retail environment. The two regions with comparable sales increases were the mid-atlantic and the midwest regions. The regions with the weakest comparable store sales were the southeast, northeast and northwest regions. Strong sales trends were noted for casual tops within the core women's collections and within the dressier "Wear @ Work" assortment dressy tops performed well. The weakest results came from the dressier club assortment, shoes and a general softening in sales trends of bottoms. For the year, the Plus size collection produced an 18% comparable sales increase. The growth in the Plus size collection represented approximately two percentage points of the comparable store sales results for fiscal 2009. Knit tops and Denim continue to be the key drivers within the Plus collection.

Revenue also includes income from the non-redemption of a portion of gift cards and gift certificates sold, and merchandise credits issued (gift card breakage). We recognize income on unredeemed gift cards when it can be determined that the likelihood of the remaining balances being redeemed are remote and that there are no legal obligations to remit the remaining balances to relevant jurisdictions. During fiscal 2009, we recognized $1.8 million of breakage income related to unredeemed gift cards which included $1.3 million for dressbarn and $0.5 million for maurices. During fiscal 2008, we recognized $2.2 million of breakage income related to unredeemed gift cards which included $1.8 million for dressbarn and $0.4 million for maurices.

Cost of sales, including occupancy and buying costs, excluding depreciation:

                                                July 25,        July 26,
(Amounts in millions, except for % amounts)          2009           2008       $ Change      % Change

Fiscal year ended                             $     918.4     $    885.9     $     32.5           3.7 %
As a percentage of sales                             61.5 %         61.3 %

Cost of sales increased by 20 basis points to 61.5% of net sales in the current year period from 61.3% of net sales in the prior year period. For the dressbarn brand, cost of sales was $568.7 million or 62.7% of net sales, a decrease of 70 basis points as compared to $562.3 million or 63.4% from the same period last year. This decrease was the result of higher merchandise margins from last year mainly due to lower markdowns. maurices cost of sales for fiscal 2009 was $349.7 million or 59.5% of net sales as compared to $323.6 million or 58.1% of net sales in fiscal 2008. The increase in cost of sales as a percentage of sales was primarily the result of higher markdowns and the deleveraging of occupancy costs due to the comparable store sales decline.

SG&A expenses:
                                                July 25,        July 26,
(Amounts in millions, except for % amounts)          2009           2008     $ Change    % Change

Fiscal year ended                             $     422.4      $   397.4    $    25.0      6.3  %
As a percentage of sales                             28.3 %         27.5 %

As a percentage of sales, selling, general and administrative expenses ("SG&A") increased 80 basis points to 28.3% of net sales versus 27.5% last year. dressbarn SG&A increased 50 basis points to 29.2% of net sales versus 28.7% last year due to increased professional fees relating to the pending Tween Brand, Inc. merger and store impairment charges. Excluding the professional fees related to the Tween Brands, Inc. merger, SG&A expenses would have been 28.8% of net sales. maurices SG&A was $157.5 million or 26.8% of net sales for fiscal 2009 as compared to $142.7 million or 25.6% of net sales for fiscal 2008. The increase was primarily attributable to a de-leveraging of payroll and benefits due to the comparable sales decrease coupled with a trade name impairment (described in Note 5 to the Financial Statements). Excluding the trade name impairment SG&A would have been 26.4% of net sales.

Depreciation and amortization:

                                                July 25,       July 26,
(Amounts in millions, except for % amounts)         2009           2008      $ Change      % Change

Fiscal year ended                             $     48.5     $     48.2     $     0.3           0.6 %
As a percentage of sales                             3.2 %          3.3 %

Depreciation expense increased 0.6% in fiscal 2009 as compared to last year primarily from the net opening of 56 stores, store remodels and relocations, and investment in technology.

Operating income:
                                                July 25,       July 26,
(Amounts in millions, except for % amounts)         2009           2008       $ Change       % Change

Fiscal year ended                             $    105.0     $    112.6     $     (7.6 )         (6.7 )%
As a percentage of sales                             7.0 %          7.8 %

As a result of the above factors, operating income as a percent of net sales was 7.0% for fiscal 2009 compared to 7.8% for fiscal 2008. For the dressbarn brand, operating income as a percent of sales increased to 5.0% versus 4.8% fiscal 2008. For the maurices brand, operating income as a percent of sales decreased to 10.3% versus 12.6% last fiscal year.

Interest income:
                                               July 25,      July 26,
(Amounts in millions, except for % amounts)        2009          2008       $ Change       % Change

Fiscal year ended                             $     5.4     $     7.8     $     (2.4 )        (30.8 )%
As a percentage of sales                            0.4 %         0.5 %

Interest income for the fifty-two week period was $5.4 million as compared to interest income of $7.8 million in fiscal 2008 due to lower interest rate yields in the current year. During fiscal 2009 we adopted a more conservative strategy with investments in higher grade securities with shorter term maturities for greater security and liquidity.

Interest expense:
                                                July 25,        July 26,
(Amounts in millions, except for % amounts)         2009            2008       $ Change      % Change

Fiscal year ended                             $     (4.8 )    $     (4.8 )    $     0.0           0.0 %
As a percentage of sales                            (0.3 )%         (0.3 )%

Interest expense for the fiscal year, primarily on our Convertible Senior Notes and the mortgage on our Suffern, NY facilities, remained consistent with the prior fiscal year.

Other income (expense):
                                               July 25,      July 26,
(Amounts in millions, except for % amounts)        2009          2008      $ Change       % Change

Fiscal year ended                             $     1.1     $     0.5     $     0.6          120.0 %
As a percentage of sales                            0.1 %         0.0 %

Other income (expense) for the fiscal year was $1.1 million as compared to $0.5 million last year. The majority of this amount represents rental income from the two tenants currently occupying space in our corporate headquarters property in Suffern, New York. Fiscal 2008 included approximately $1.1 million of a cost basis investment impairment.

Income taxes:

                                                July 25,       July 26,
(Amounts in millions, except for % amounts)         2009           2008       $ Change       % Change

Fiscal year ended                             $     37.0     $     42.0     $     (5.0 )        (11.9 )%
As a percentage of sales                             2.5 %          2.9 %

The effective tax rate for fiscal 2009 was 34.7% as compared to 36.2% effective tax rate reported for fiscal 2008. Refer to Note 11 to the consolidated financial statements for additional details.

Fiscal 2008 Compared to Fiscal 2007

Net Sales:
                                                                             Fifty-Two Weeks Ended
                                                      July 26,                      July 28,
(Amounts in millions, except for % change amounts)        2008      % of Sales          2007      % of Sales       % Change
dressbarn                                            $   887.6            61.5 %   $   934.8            65.5 %         (5.0 )%
maurices                                                 556.6            38.5 %       491.8            34.5 %         13.2 %
Consolidated net sales                               $ 1,444.2                     $ 1,426.6                            1.2 %

Net sales for the fifty-two weeks ended July 26, 2008 increased 1.2% to $1,444.2 million from $1,426.6 million in the prior year. This increase was mainly driven by a 5.2% square footage increase offset by a comparable store sales decrease of 2.9%. The same store sales decrease was the result of several factors including decreased customer traffic to our stores and fewer customer transactions. We believe the decrease in the number of customer transactions was the result of the continuing economic challenges that are affecting a significant number of our customers.

During fiscal 2008, the dressbarn brand was negatively impacted by the slowdown in consumer spending. All regions posted decreased comparable store sales for the fifty-two week period. The best performing departments were leather and outerwear, blazers and social occasion dresses. The weakest departmental performers were career bottoms and sweaters.

For the maurices brand, fiscal 2008 was a solid year. All six regions had comparable sales increases with the Midwest and the Northwest leading regional performance. Strong sales trends were noted for the dressier "Wear @ Work" assortment with additionally strong results from outerwear, knit tops, denim and lounge apparel. The strategic decision to exit the men's product line and replace it with plus size women's apparel was implemented in the fourth quarter of fiscal 2007. While we fell short of our sales and margin targets during the fall season, both sales and margin fell in line with expectations as the year progressed. For the year, the Plus size apparel was 23% more productive on a square footage basis than the prior men's concept. The Plus size apparel is represented in approximately 75% of our current store locations, and will be placed in most future stores.

Revenue also includes income from the non-redemption of a portion of gift cards and gift certificates sold, and merchandise credits issued (gift card breakage). We recognize income on unredeemed gift cards when it can be determined that the likelihood of the remaining balances being redeemed are remote and that there are no legal obligations to remit the remaining balances to relevant jurisdictions. Prior to fiscal 2007, we were unable to reliably estimate such gift card breakage and therefore recorded no such income in fiscal 2006, or prior years. During the fourth quarter of fiscal 2007, we accumulated a sufficient level of historical data to determine an estimate of gift card breakage for the first time. During fiscal 2008, we recognized $2.2 million of breakage income related to unredeemed gift cards which included $1.8 million for dressbarn and $0.4 million for maurices. During fiscal 2007, we recognized $3.7 million of breakage income related to unredeemed gift cards which included $2.6 million for dressbarn and $1.1 million for maurices.

Cost of sales, including occupancy and buying costs, excluding depreciation:

                                                July 26,       July 28,
(Amounts in millions, except for % amounts)         2008           2007       $ Change       % Change

Fiscal year ended                             $    885.9     $    842.2     $     43.7            5.2 %
As a percentage of sales                            61.3 %         59.0 %

Cost of sales increased by 230 basis points to 61.3% of net sales in the current year period from 59.0% of net sales in the prior year period. For the dressbarn brand, cost of sales was $562.3 million or 63.4% of net sales, an increase of 410 basis points as compared to $554.5 million or 59.3% from the same period last year. This increase was the result of lower merchandise margins from last year mainly due to increased markdowns and the de-leveraging of store occupancy costs. maurices cost of sales for fiscal 2008 was $323.6 million or 58.1% of net sales as compared to $287.7 million or 58.5% of net sales in fiscal 2007. The decrease in cost of sales as a percentage of sales was primarily the result of higher initial markons.

SG&A expenses:
                                                July 26,       July 28,
(Amounts in millions, except for % amounts)         2008           2007       $ Change       % Change

Fiscal year ended                             $    397.4     $    383.7     $     13.7            3.6 %
As a percentage of sales                            27.5 %         26.9 %

As a percentage of sales, selling, general and administrative expenses ("SG&A") increased 60 basis points to 27.5% of net sales versus 26.9% last year. dressbarn SG&A increased 120 basis points to 28.7% of net sales versus 27.5% last year due primarily to the de-leveraging of payroll related expenses as a result of our comparable store sales decrease and increased marketing, utilities and professional fees. maurices SG&A was $142.7 million or 25.6% of net sales for the fiscal 2008 as compared to $126.1 million or 25.6% in fiscal 2007. Increased marketing investments were partially offset by lower health insurance and workers compensation claims and improved leveraging from the increase in comparable store sales.

Depreciation and amortization:
                                                July 26,       July 28,
(Amounts in millions, except for % amounts)         2008           2007       $ Change       % Change

Fiscal year ended                             $     48.2     $     45.8     $      2.4            5.2 %
As a percentage of sales                             3.3 %          3.2 %

Depreciation expense increased 5.2% in fiscal 2008 as compared to last year primarily from the opening of 107 stores, store remodels and relocations, and investment in technology.

. . .