**UNITED
                STATES****SECURITIES
                AND EXCHANGE COMMISSION**Washington,
                D.C. 20549**FORM
                10-K**ANNUAL
                REPORT PURSUANT TO SECTION 13 or 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934For
                the fiscal year ended**July
                28, 2007**
            Commission
                file number 0-11736**THE
                DRESS BARN, INC**.(Exact
                name of registrant as specified in its
                charter)





Connecticut
            06-0812960(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)30
                Dunnigan Drive, Suffern, New York
            10901(Address
                of principal executive offices)
            (Zip
                Code)




(845)
      369-4500


(Registrant's
      telephone number, including area code)


Securities
      registered pursuant to Section 12(b) of the Act:




Title
                of Each Class
            Name
                of each exchange on which
                registeredCommon
                Stock, $0.05 par value
            The
                NASDAQ Stock Market LLC


Securities
      registered pursuant to Section 12(g) of the Act: None





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. Yes
x No
o




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15 (d) of the Act.


Yes
o
      No x.





Indicate
      whether the registrant (1) has filed all reports required to be filed by Section
      13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
      months (or for such shorter period that the registrant was required to file
      such
      reports), and (2) has been subject to such filing requirements for the past
      90
      days. Yes
x
      No o.





Indicate
      if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
      not
      contained herein, and will not be contained, to the best of registrant's
      knowledge, in the definitive proxy or information statements incorporated by
      reference in Part III of this Form 10-K or any amendment to this Form 10-K.
      x.





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):


Large
                  accelerated filer x
              Accelerated
                  filer o
              Non-accelerated filer o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes o
      No x




The
      aggregate market value of the voting stock held by non-affiliates of the
      registrant as of January 27, 2007 was approximately $1 billion, based on the
      last reported sales price on the NASDAQ Global Select Market (formerly the
      NASDAQ National Market) on that date. As of  October 5, 2007, 60,081,334
      shares of voting common shares were outstanding. The registrant does not have
      any authorized or issued or outstanding non-voting common stock.





**DOCUMENTS
      INCORPORATED BY REFERENCE**





Portions
      of the registrant's Proxy Statement for the Annual Meeting of Shareholders
      to be
      held on November 28, 2007 are incorporated into Part III of this Form
      10-K.









**THE
      DRESS BARN, INC.**


**FORM
      10-K**


**FISCAL
      YEAR ENDED JULY 28, 2007**


**TABLE
      OF CONTENTS**




**PART
                  I**
              
              **PAGE****Item
                  1**
              **Business**General
              **3**Locations
                  and Properties
              **4**Advertising
                  and Marketing
              **4**Trademarks
              **5**Employees
              **5**Seasonality
              **5**Competition
              **5**Merchandise
                  Vendors
              **5**Available
                  Information
              **5****Item
                  1A**
              **Risk
                  Factors**
              **6****Item
                  1B**
              **Unresolved
                  Staff Comments**
              **9****Item
                  2**
              **Properties**
              **9****Item
                  3**
              **Legal
                  Proceedings**
              **10****Item
                  4**
              **Submission
                  of Matters to a Vote of Security Holders**
                  **Executive
                    Officers of the Registrant**
              **10****PART
                  II****Item
                  5**
              **Market
                  for Registrant’s Common Equity, Related Stockholder Matters and**
                  **Issuer
                    Purchases of Equity Securities**
              **11****Item
                  6**
              **Selected
                  Financial Data**
              **14****Item
                  7**
              **Management’s
                  Discussion and Analysis of**
                **Financial
                  Condition and Results of Operations**
              **15****Item
                  7A**
              **Quantitative
                  and Qualitative Disclosures About Market Risk**
              **26****Item
                  8**
              **Financial
                  Statements**
              **26****Item
                  9**
              **Changes
                  in and Disagreements with Accountants**
                **on
                  Accounting and Financial Disclosure**
              **26****Item
                  9A**
              **Controls
                  and Procedures**
              **26****Item
                  9B**
              **Other
                  Information**
              **28****PART
                  III****Item
                  10**
              **Directors,
                  Executive Officers and Corporate Governance**
              **29****Item
                  11**
              **Executive
                  Compensation**
              **29****Item
                  12**
              **Security
                  Ownership of Certain Beneficial Owners**
                **and
                  Management and Related Stockholder Matters**
              **29****Item
                  13**
              **Certain
                  Relationships and Related Transactions, and Director
                  Independence**
              **29****Item
                  14**
              **Principal
                  Accountant Fees and Services**
              **29****PART
                  IV****Item
                  15**
              **Exhibits,
                  Financial Statement Schedules**
              **30**





2





*This
      Annual Report on Form 10-K* *,
      including the sections labeled Management’s Discussion and Analysis of Financial
      Condition and Results of Operations, contains forward-looking statements that
      should be read in conjunction with the consolidated financial statements and
      notes to consolidated financial statements and risk factors that we have
      included elsewhere in this report. These forward-looking statements are based
      on
      our current expectations, assumptions, estimates and projections about our
      business and our industry, and involve known and unknown risks, uncertainties,
      and other factors that may cause our or our industry’s results, levels of
      activity, performance or achievements to be materially different from any future
      results, levels of activity, performance or achievements expressed or implied
      in, or contemplated by, the forward-looking statements. We generally identify
      these statements by words or phrases such as “believe”, “anticipate”, “expect”,
“intend”, “plan”, “may”, “should”, “estimate”, “predict”, “potential”,
“continue” or the negative of such terms or other similar expressions. Our
      actual results may differ significantly from the results discussed in the
      forward-looking statements. Factors that might cause such a difference include
      those discussed below under Item 1A. RISK FACTORS, and other factors discussed
      in this Annual Report on Form 10-K and other reports we filed with the
      Securities and Exchange Commission. We disclaim any intent or obligation to
      update or revise any forward-looking statements as a result of developments
      occurring after the period covered by this report or otherwise.*





**dressbarn** ®, **dressbarn**  **woman** â , **maurices** â ,
      and
      Studio Y â  are
      our
      trademarks. Fiscal
      2007 refers to the 52-week period ended July 28, 2007, Fiscal 2006 refers to
      the
      52-week period ended July 29, 2006, and Fiscal 2005 refers to the 52-week period
      ended July 30, 2005. Fiscal 2008 refers to our 52-week period that will end
      on
      July 26, 2008.





**PART
      I**





**ITEM
      1.** **BUSINESS**





General





We
      operate women’s apparel specialty stores, principally under the names
“ **dressbarn** ”,
      “ **dressbarn
      woman** ”
and
      “ **maurices** ”.
      Since
      our retail business began in 1962, we have established, marketed and expanded
      our brands as a source of fashion and value. We offer a lifestyle-oriented,
      stylish, value-priced assortment of career and casual fashions tailored to
      our
      customers’ needs. As of July 28, 2007, we operated 1,428 stores in 48 states and
      the District of Columbia, including 617 **dressbarn** Combo
      stores (a combination of our **dressbarn** and **dressbarn
      woman** brands),
      607 **maurices** stores,
      161 **dressbarn** stores
      and 43 **dressbarn
      woman** stores.
      References to “we”, “us”, “our” or “our company” or other similar terms in this
      report are to The Dress Barn, Inc. and its wholly owned
      subsidiaries.





Our **dressbarn** stores
      are typically operated as Combo stores, offering both **dressbarn** and
      larger-sized **dressbarn
      woman** merchandise. We also operate stand-alone **dressbarn** and **dressbarn
      woman** stores
      in certain markets. Our **dressbarn** brands
      cater to 35- to 55-year-old women, sizes 4 to 24. Our **dressbarn** stores
      offer in-season, moderate to better quality career and casual fashion at value
      prices, and are located primarily in convenient strip shopping centers in major
      trading and high-density markets and surrounding suburban areas. Our centrally
      managed merchandise selection is changed and augmented frequently to keep our
      merchandise presentation fresh and exciting. Carefully edited, coordinated
      merchandise is featured in a comfortable, easy-to-shop environment, staffed
      by
      friendly, service-oriented salespeople.





Our **maurices** stores
      cater to the apparel and accessory needs of 17- to 34-year-old women and are
      typically located in small markets with populations of approximately 25,000
      to
      100,000. Our **maurices** stores
      offer moderately priced, up-to-date fashions designed to appeal to a younger
      female customer than our **dressbarn** brands.
      During the fourth quarter of Fiscal 2007, we made the strategic decision to
      exit
      the men’s product line and to expand the current core female assortment of **maurices** merchandise with styles targeted at the plus-size female customer. **maurices** merchandise is primarily sold under two brands, **maurices** and
      Studio Y. The **maurices** brand
      encompasses women’s casual clothing, career wear and accessories. Studio Y
      represents women’s dressy apparel. Our **maurices** stores
      are typically located near large discount and department stores to capitalize
      on
      the traffic those retailers generate. We seek to differentiate **maurices** from
      those retailers by offering a wider selection of style, color and current
      fashion and by the shopping experience we offer, which emphasizes a visually
      stimulating environment with a helpful staff. While our **maurices** stores
      offer a core merchandise assortment, individual **maurices** stores
      vary and augment their merchandise assortment to reflect individual store
      demands and local market preferences.





All
      of
      our stores are directly managed and operated by us. Virtually all of our stores
      are open seven days a week and most evenings. We utilize creative incentive
      programs and comprehensive training programs to ensure that our customers
      receive friendly and helpful service.




3




We
      acquired Maurices Incorporated in January 2005. The acquisition was a good
      fit
      for us because we share similar values and business cultures. Since the
      acquisition, while we have maintained each of our brand’s distinct focus and
      appeal, keeping many functions separate, we have also sought appropriate
      opportunities to generate synergies through leveraging certain centralized
      functions, such as taxes, purchasing, lease administration, imports and loss
      prevention. We believe our synergies have improved both **dressbarn’s** and **maurices’** performance.




Locations
      and Properties





As
      of
      July 28, 2007, we operated 1,428 stores in  48
      states
      and the District of Columbia. 848 of the stores were conveniently located in
      strip centers and 235 stores were located in outlet centers. During Fiscal
      2007,
      no store accounted for as much as 1% of our total sales. The table below
      indicates the type of shopping facility in which the stores were
      located:


**Type
                of Facility**
            
            **dressbarn
                Stores**
            
            **dressbarn
                woman**
              **Stores**
            
            **Combo**
              **Stores**
            
            **maurices**
              **Stores**
            
            **Total**Strip
                Shopping Centers
            
            107
            
            20
            
            435
            
            286
            
            848Outlet
                Malls and Outlet Strip Centers
            
            36
            
            20
            
            153
            
            26
            
            235Free
                Standing, Downtown and Enclosed Malls
            
            18
            
            3
            
            29
            
            295
            
            345**Total**
            
            **161**
            
            **43**
            
            **617**
            
            **607**
            
            **1,428**





As
      of
      July 28, 2007, **dressbarn** had 6.1
      million total square feet in all its stores and **maurices** had 2.9
      million total square feet. All of our store locations are leased. Our leases
      typically contain renewal options and also provide an option to terminate at
      little or no cost, particularly in the early years of a lease, if specified
      sales volumes are not achieved. Our **dressbarn** stores
      are primarily concentrated in the north-east while our **maurices** stores
      are primarily concentrated in the mid-west.





During
      Fiscal 2007, we opened 42 **dressbarn** Combo
      stores and converted five existing stores to Combo stores. We also opened 64 **maurices** stores
      during Fiscal 2007. We evaluate store-level performance and seek to close or
      relocate underperforming stores. During Fiscal 2007, we closed 17 locations,
      including 14 **dressbarn** stores
      and 3 **maurices** stores.
      We expect to open approximately 106 new stores in Fiscal 2008, comprised of
      approximately 41 **dressbarn** locations (almost all of which will be Combo stores) and approximately 65 **maurices** locations. Net of store closings, we currently plan to increase our aggregate **dressbarn** square
      footage by approximately 3%, and **maurices** by
      approximately 9%, in Fiscal 2008.





We
      own an
      approximately 900,000 square-foot distribution/office facility and 16 acres
      of
      adjacent land in Suffern, New York, which houses, in approximately 510,000
      square feet, our corporate offices and our **dressbarn** distribution center, with the remainder of the facility leased. We own **maurices’** corporate headquarters in downtown Duluth, Minnesota, which is composed of
      three
      adjacent office buildings totaling 150,564 square feet. We also own a 360,000
      square-foot distribution center in Des Moines, Iowa, which houses our **maurices** warehousing and distribution operations.





Advertising
      and Marketing





We
      rely
      on direct mail, national print advertising in lifestyle magazines and compelling
      window and in-store marketing materials to communicate our fashion and
      promotional message. We utilize a customer relationship management system to
      track customer transactions and determine strategic decisions for our direct
      mail initiatives. We pursue a public relations strategy to garner editorial
      exposure.





We
      participate in national cause-related marketing initiatives that resonate with
      our customers, creating brand affinity. Our current key partners in these
      programs include The American Cancer Society, Dress for Success, American Heart
      Association, and World Vision. We believe these programs, which are conducted
      at
      the local level, reinforce that our stores are important and integral members
      of
      their communities.





4


Trademarks





We
      have
      U.S. Certificates of Registration of Trademark and trademark applications
      pending for the operating names of our stores and our major private label
      merchandise brands ( **dressbarn** , **maurices** ,
      and
      Studio Y, among others) . We believe
      our **dressbarn** , **dressbarn
      woman** , **maurices** and
      Studio Y trademarks are material to the continued success of our business. We also
      believe that our rights to these trademarks are adequately protected.





Employees





As
      of
      July 28, 2007, we had approximately 13,200 employees, approximately 8,000 of
      whom worked part-time. We typically add temporary employees during peak selling
      periods. None of our employees are covered by any collective bargaining
      agreement. We consider our employee relations to be good.





Seasonality





We
      have
      historically experienced substantially lower earnings in our second fiscal
      quarter ending in January, reflecting the intense promotional atmosphere that
      has characterized the holiday shopping season in recent years. In addition,
      our
      quarterly results of operations may fluctuate materially depending on, among
      other things, increases or decreases in comparable store sales, adverse weather
      conditions, shifts in timing of certain holidays, the number and timing of
      new
      store openings and closings, net sales contributed by new stores and changes
      in
      our merchandise mix.





Competition





The
      retail apparel industry is highly competitive and fragmented, with numerous
      competitors, including department stores, off-price retailers, specialty stores,
      discount stores, mass merchandisers and Internet-based retailers, many of which
      have substantially greater financial, marketing and other resources than us.
      Many of our competitors are able to engage in aggressive promotions, reducing
      their selling prices. Some of our competitors include JCPenney, Kohl’s, Old
      Navy, Target and Sears. Other competitors may move into the markets that we
      serve. Our business is vulnerable to demand and pricing shifts, and to changes
      in customer tastes and preferences. If we fail to compete successfully, we
      could
      face lower net sales and may need to offer greater discounts to our customers,
      which could result in decreased profitability. We believe that we have
      established and reinforced our image as a source of fashion and value by
      focusing on our target customers, and by offering superior customer service.





Merchandise
      Vendors





We
      purchase our merchandise from many domestic and foreign suppliers. We have
      no
      long-term purchase commitment or arrangements with any of our suppliers, and
      believe that we are not dependent on any one supplier. We continue to have
      good
      working relationships with our suppliers.





Available
      Information





We
      maintain our corporate Internet website at www.dressbarn.com .
      The
      information on our Internet website is not incorporated by reference into this
      report. We make available, free of charge through publication on our Internet
      website, a copy of our Annual Reports on Form 10-K, our quarterly reports on
      Form 10-Q and our current reports on Form 8-K, including any amendments to
      those
      reports, as filed with or furnished to the Securities and Exchange Commission,
      or SEC, as soon as reasonably practicable after they have been so filed or
      furnished.




5


**ITEM
      1A.** **RISK
      FACTORS**




***Our
      business is dependent upon our ability to predict accurately fashion trends,
      customer preferences and other fashion-related
      factors.***




Customer
      tastes and fashion trends are volatile and tend to change rapidly, particularly
      for women’s apparel. Our success depends in part upon our ability to anticipate
      and respond to changing merchandise trends and consumer preferences in a timely
      manner. Accordingly, any failure by us to anticipate, identify and respond
      to
      changing fashion trends could adversely affect consumer acceptance of the
      merchandise in our stores, which in turn could adversely affect our business
      and
      our image with our customers. If we miscalculate either the market for our
      merchandise or our customers’ tastes or purchasing habits, we may be required to
      sell a significant amount of unsold inventory at below average markups over
      cost, or below cost, which would have an adverse effect on our margins and
      results of operations.




***We
      face challenges to grow our business and to manage our
      growth.***




Our
      growth is dependent, in large part, upon our ability to successfully add new
      stores. In addition, on a routine basis, we close underperforming stores, which
      may result in write-offs. The success of our growth strategy depends upon a
      number of factors, including the identification of suitable markets and sites
      for new stores, negotiation of leases on acceptable terms, construction or
      renovation of sites in a timely manner at acceptable costs and maintenance
      of
      the productivity of our existing store base. We must be able to hire, train
      and
      retain competent managers and personnel and manage the systems and operational
      components of our growth. Our failure to open new stores on a timely basis,
      obtain acceptance in markets in which we currently have limited or no presence,
      attract qualified management and personnel or appropriately adjust operational
      systems and procedures would have an adverse effect on our growth prospects.




***We
      rely on foreign sources of production.***




We
      purchase a significant portion of our apparel directly in foreign markets,
      including Asia, the Middle East and Africa, and indirectly through domestic
      vendors with foreign sources. We face a variety of risks generally associated
      with doing business in foreign markets and importing merchandise from abroad,
      including:




·
            political
                instability;




·
            increased
                security requirements applicable to imported
                goods;




·
            imposition
                or increases of duties, taxes and other charges on
                imports;




·
            imposition
                of quotas on imported merchandise;




·
            currency
                and exchange risks;




·
            delays
                in shipping; and




·
            increased
                costs of transportation.




New
      initiatives may be proposed that may have an impact on the trading status of
      certain countries and may include retaliatory duties or other trade sanctions
      that, if enacted, could increase the cost of products purchased from suppliers
      in such countries or restrict the importation of products from such countries.
      The future performance of our business depends on foreign suppliers and may
      be
      adversely affected by the factors listed above, all of which are beyond our
      control. This may result in our inability to obtain sufficient quantities of
      merchandise or increase our cost, thereby negatively impacting sales, gross
      profit and net earnings.




***Our
      business would be severely disrupted if our distribution centers were to shut
      down.***




The
      distribution of our **dressbarn** products
      is centralized in one distribution center in Suffern, New York and the
      distribution of our **maurices** products
      is centralized in one distribution center in Des Moines, Iowa. Most of the
      merchandise we purchase is shipped directly to our distribution centers, where
      it is prepared for shipment to the appropriate stores. If either of these
      distribution centers were to shut down or lose significant capacity for any
      reason, our operations would likely be seriously disrupted. As a result, we
      could incur significantly higher costs and longer lead times associated with
      distributing our products to our stores during the time it takes for us to
      reopen or replace either distribution center.




6




***We
      depend on strip shopping center and mall traffic and our ability to identify
      suitable store locations.***




Our
      sales
      are dependent in part on a high volume of strip shopping center and mall
      traffic. Strip shopping center and mall traffic may be adversely affected by,
      among other things, economic downturns, the closing of anchor stores or changes
      in customer shopping preferences. A decline in the popularity of strip shopping
      center or mall shopping among our target customers could have a material adverse
      effect on customer traffic and reduce our sales and net earnings.




To
      take
      advantage of customer traffic and the shopping preferences of our customers,
      we
      need to maintain or acquire stores in desirable locations and competition for
      suitable store locations is intense.




***Our
      management information systems may fail and cause disruptions in our
      business.***




We
      rely
      on our existing management information systems in operating and monitoring
      all
      major aspects of our business, including sales, warehousing, distribution,
      purchasing, inventory control, merchandise planning and replenishment, as well
      as various financial systems. Any disruption in the operation of our management
      information systems, or our failure to continue to upgrade, integrate or expend
      capital on such systems as our business expands, would have a material adverse
      effect on our business. We will begin utilizing the Oracle Retail Merchandising
      System for the **dressbarn** segment
      starting in Fiscal 2008. A version of this merchandising system is already
      utilized by our **maurices** segment.
      We engaged several third-party consulting firms to assist with the
      implementation. We also dedicated several internal personnel on a part-time
      and
      a full-time basis to work on the implementation. The purpose of the Oracle
      Retail Merchandising system is to expand our capability to identify and analyze
      sales trends and consumer data, and achieve planning and inventory management
      improvements. Any delays or difficulties in utilizing the Oracle Retail
      Merchandising System or integrating it with our other systems or any other
      disruptions affecting any of our information systems could have a material
      adverse impact on our business, financial condition and results of operations.




***Our
      business could suffer as a result of a manufacturer’s inability to produce goods
      for us on time and to our specifications.***




We
      do not
      own or operate any manufacturing facilities and therefore depend upon
      independent third parties for the manufacture of all of the goods that we sell.
      Both domestic and international manufacturers manufacture these goods. The
      inability of a manufacturer to ship orders in a timely manner or to meet our
      standards could cause us to miss sales of seasonal items, which could affect
      our
      ability to attain goods which would have a material adverse impact on our
      business.




***Our
      business could suffer if we need to replace
      manufacturers.***




We
      compete with other companies for the production capacity of our manufacturers
      and import quota capacity. Many of our competitors have greater financial and
      other resources than we have and thus may have an advantage in the competition
      for production capacity. If we experience a significant increase in demand,
      or
      if an existing manufacturer of the goods that we sell must be replaced, we
      may
      have to increase purchases from our third-party manufacturers and we cannot
      guarantee we will be able to do so either at all or on terms that are acceptable
      to us. This may negatively affect our sales and net earnings. We enter into
      a
      number of purchase order commitments each season specifying a time for delivery,
      method of payment, design and quality specifications and other standard industry
      provisions, but we do not have long-term contracts with any manufacturer. None
      of the manufacturers we use produces products for us exclusively.




***Our
      business could suffer if one of the manufacturers of the goods that we sell
      fails to use acceptable labor practices.***




We
      require manufacturers of the goods that we sell to operate in compliance with
      applicable laws and regulations. While our internal and vendor operating
      guidelines promote ethical business practices and our staff and our agents
      periodically visit and monitor the operations of our independent manufacturers,
      we do not control these manufacturers or their labor practices. The violation
      of
      labor or other laws by an independent manufacturer used by us, or the divergence
      of an independent manufacturer’s labor practices from those generally accepted
      as ethical in the United States, could interrupt, or otherwise disrupt the
      shipment of products to us or damage our reputation, which may result in a
      decrease in customer traffic to our stores and adversely affect our sales and
      net earnings.




***Existing
      and increased competition in the women’s retail apparel industry may reduce our
      net revenues, profits and market share.***




The
      women’s retail apparel industry is highly competitive. We compete primarily with
      department stores, off-price retailers, specialty stores, discount stores,
      mass
      merchandisers and Internet-based retailers, many of which have substantially
      greater financial, marketing and other resources than we have. Many department
      stores offer a broader selection of merchandise than we offer. In addition,
      many
      department stores continue to be promotional and reduce their selling prices,
      and in some cases are expanding into markets in which we have a significant
      market presence. As a result of this competition, including close-out sales
      and
      going-out-of-business sales by other women’s apparel retailers, we may
      experience pricing pressures, increased marketing expenditures and loss of
      market share, which could have a material adverse effect on our business,
      financial condition and results of operations.




7




***We
      depend on key personnel in order to support our existing business and future
      expansion and may not be able to retain or replace these employees or recruit
      additional qualified personnel.***




Our
      success and our ability to execute our business strategy depend largely on
      the
      efforts of our management. The loss of the services of one or more of our key
      personnel could have a material adverse effect on our business, as we may not
      be
      able to find suitable management personnel to replace departing executives
      on a
      timely basis. We do not have key man life insurance on our key personnel. We
      compete for experienced personnel with companies who have greater financial
      resources than we do. If we fail to attract, motivate, and retain qualified
      personnel, it could harm our business and limit our ability to expand.




***A
      decline in general economic conditions may lead to reduced consumer demand
      for
      our apparel and accessories.***




Consumer
      spending habits, including spending for our apparel and accessories, are
      affected by, among other things, prevailing economic conditions, levels of
      employment, gas prices, salaries, wage rates, the availability of consumer
      credit, consumer confidence, and consumer perception of economic conditions.
      A
      general slowdown in the United States economy and an uncertain economic outlook
      may adversely affect consumer spending habits and customer traffic, which may
      result in lower net sales by us. A prolonged economic downturn could have a
      material adverse effect on our business, financial condition, and results of
      operations.




***Our
      new product line may not result in increased profitability for
      us.***




We
      have
      introduced a new product line within the operating segment of **maurices** .
      In the
      third quarter of Fiscal 2007, **maurices** began
      transitioning out of the men’s product line in order to introduce female
      plus-sizes beginning in the fourth quarter of Fiscal 2007.




***Covenants
      in our revolving credit facility agreement may impose operating
      restrictions.***




Our
      revolving credit facility agreement has financial covenants with respect to
      consolidated net worth, as well as other financial ratios. If we fail to meet
      these covenants or obtain appropriate waivers, our lender may terminate the
      revolving credit facility.





***Our
      business may be affected by regulatory and litigation
      developments.***




Various
      aspects of our operations are subject to federal, state or local laws, rules
      and
      regulations, any of which may change from time to time. Additionally, we are
      regularly involved in various litigation matters that arise in the ordinary
      course of our business.




***Natural
      disasters,*** ***war
      and acts of terrorism on the United States or international economies may
      adversely impact our business.***




A
      significant act of terrorism or a natural disaster event on the United States
      or
      elsewhere, could have an adverse impact on us by, disrupting the production
      or
      information systems, or lead to lower client traffic. Additionally, any of
      these
      events could result in higher costs of doing business, hindrance of imports
      or
      domestic products to us and reduced consumer confidence and spending resulting
      in a material adverse effect on our business, financial condition, and results
      of operations.




***Failure
      to comply with Section 404 of the Sarbanes-Oxley Act of 2002 could negatively
      impact our business, the price of our common stock, and market confidence in
      our
      reported financial information.***




We
      must
      continue to document, test, monitor and enhance our internal controls over
      financial reporting in order to satisfy the requirements of Section 404 of
      the
      Sarbanes-Oxley Act of 2002. We cannot assure that our disclosure controls,
      procedures and internal controls over financial reporting required under Section
      404 of the Sarbanes-Oxley Act will prove to be adequate in the future. Any
      failure to maintain the effectiveness of internal controls over financial
      reporting or to comply with the requirements of the Sarbanes-Oxley Act of 2002
      could have a material adverse impact on our business, our financial condition
      and the price of our common stock.




8




**ITEM
      1B.** **UNRESOLVED
      STAFF COMMENTS**




None.




**ITEM
      2.** **PROPERTIES**





We
      lease
      all of our stores. Store leases generally have an initial term ranging from
      5 to
      10 years with one or more options to extend the lease. The table below, covering
      all open store locations leased by us on July 28, 2007, indicates the number
      of
      leases expiring during the period indicated and the number of expiring leases
      with and without renewal options:





**Leases**
            
            **Number
                with**
            
            **Number
                Without****Fiscal
                Years**
            
            **Expiring**
            
            **Renewal
                Options**
            
            **Renewal
                Options**2008
            
            
            287
            
            
            103
            
            
            1842009
            
            
            259
            
            
            170
            
            
            892010-2012
            
            
            654
            
            
            505
            
            
            1492013
                and thereafter
            
            
            228
            
            
            158
            
            
            70**Total**
            
            
            1,428
            
            
            936
            
            
            492





New
      store
      leases generally provide for a base rent of between $6 and $32 per square foot
      per annum. Most leases have formulas requiring the payment of a percentage
      of
      sales as additional rent, generally when sales reach specified levels. Our
      aggregate minimum rentals under operating leases in effect at July 28, 2007
      and
      excluding locations acquired after July 28, 2007, for Fiscal 2008, are
      approximately $144.5 million. In addition, we are also typically responsible
      under our store leases for our pro rata share of maintenance expenses and common
      charges in strip and outlet centers.





Most
      of
      the store leases give us the right to terminate the lease at little or no cost
      if certain specified sales volumes are not achieved. This affords us greater
      flexibility to close underperforming stores. Usually these provisions are
      operative only during the first few years of the lease.





Our
      investment in new stores consists primarily of inventory, leasehold
      improvements, fixtures and equipment. We often receive tenant improvement
      allowances from landlords to offset these initial investments. Our stores are
      typically profitable within the first 12 months of operation.





We
      own a
      510,000 square foot office and distribution center in Suffern, New York. The
      Suffern facility consists of approximately 65 acres of land, with a current
      total of approximately 900,000 square feet of rentable distribution and office
      space, the majority of which is occupied by us. The remainder of the rentable
      square footage is 100% leased through 2012. The purchase of the Suffern facility
      was financed with a mortgage that is collateralized by a mortgage lien on the
      Suffern facility. Payments of principal and interest on the mortgage, which
      is a
      20-year fully amortizing loan with a fixed interest rate of 5.33%, are due
      monthly through July 2023. We receive rental income and reimbursement for taxes
      and common area maintenance charges from two tenants that occupy the Suffern
      facility that are not affiliated with us. The rental income from the other
      tenants is shown as “other income” on our Consolidated Statements of Earnings.
      We own **maurices’** corporate headquarters in downtown Duluth, Minnesota, which is composed of
      three
      adjacent office buildings totaling 150,564 square feet. We also own **maurices’** distribution center, which has 360,000 square feet of space and is located
      in
      Des Moines, Iowa.





9




**ITEM
      3.** **LEGAL
      PROCEEDINGS**





We
      are
      subject to ordinary routine litigation incidental to our business. Although
      the outcome of such items cannot be determined with certainty, in our opinion,
      dispositions of these matters are not expected to have a material adverse affect
      on our financial position, results of operations or cash flows.








**ITEM
      4.** **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





No
      matters were submitted to a vote of security holders during the fourth quarter
      of the fiscal year.








****  **** **EXECUTIVE
      OFFICERS OF THE REGISTRANT**





The
      following table sets for th
      the
      name, age and position with our company of the Executive Officers of the
      Registrant:




**Name**
              **Age**
              **Positions**Elliot
                  S. Jaffe
              81
              Chairman
                  of the Board andCo-FounderDavid
                  R. Jaffe
              48
              President,Chief
                  Executive Officer and DirectorVivian
                  Behrens
              54
              Senior
                  Vice President and ChiefMarketing
                  OfficerArmand
                  Correia
              61
              Senior
                  Vice President and ChiefFinancial
                  OfficerGene
                  Wexler
              52
              Senior
                  Vice President,General
                  Counsel, and Assistant SecretaryReid
                  Hackney
              49
              Vice
                  President - Finance and Corporate
                  Controller




*Mr.
      Elliot S. Jaffe* was
      Chief Executive Officer of our company from 1966 until February 2002.





*Mr.
      David R. Jaffe* became
      President and Chief Executive Officer in February 2002. Previously he had been
      Vice Chairman, Chief Operating Officer and a member of the Board of Directors
      since September 2001. He had been Vice Chairman since February 2001. He joined
      us in 1992 as Vice President-Business Development and became Senior Vice
      President in 1995 and Executive Vice President in 1996. Mr. Jaffe is the son
      of
      Elliot S. and Roslyn S. Jaffe, Secretary and Treasurer of our
      company.





*Ms.
      Vivian Behrens* has been
      employed by our company since September 2002 as Senior Vice President and Chief
      Marketing Officer. She was a member of our Board of Directors from 2001 to
      2002.
      Previously, Ms. Behrens was President of Vivian B Consulting, a marketing
      consultant to several retail and consumer product companies. She was Chief
      Executive Officer of Posh & Sticks, Ltd., a consumer products multi-channel
      retailer, from 1999 to 2000. From 1998 to 1999 she was Senior Vice
      President-Marketing of the Foot Locker Division of Venator, Inc. From 1994
      to
      1997 she was Vice President-Marketing of Charming Shoppes, Inc. Previously
      she
      held senior marketing positions at Limited Inc. and Avon Products, Inc.





*Mr.
      Armand Correia* has
      been
      Senior Vice President and Chief Financial Officer of our company since
      1991.




*Mr.
      Gene Wexler* has
      been Senior
      Vice President and General Counsel and Assistant Secretary of our company since
      2005. He previously served as Vice President, General Counsel and Secretary
      for
      Del Laboratories from 1999 until 2005.




*Mr.
      Reid Hackney* became
      Vice President - Finance and Corporate Controller in January 2005. Prior to
      that
      date he was Vice President - Finance and Controller. He has been employed at
      our
      company since 1983.




10




**PART
      II**





**ITEM
      5.** **MARKET
      FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES**




**Market
      Prices of Common Stock**





The
      Common Stock of The Dress Barn, Inc. is quoted on the NASDAQ Global Select
      Market (formerly the NASDAQ National Market) under the symbol DBRN. The
      information below has been adjusted for a 2-for-1 stock split that was effective
      as of April 3, 2006.





The
      table
      below sets forth the high and low prices as reported on the NASDAQ Global Select
      Market (formerly the NASDAQ National Market) for the last eight fiscal quarters.




**Fiscal
                  2007**
              
              **Fiscal
                  2006****Fiscal
                  Period**
              
              **High**
              
              **Low**
              
              **High**
              
              **Low**First
                  Quarter
              
              $
              24.25
              
              $
              16.91
              
              $
              13.39
              
              $
              10.75Second
                  Quarter
              
              $
              24.93
              
              $
              20.48
              
              $
              22.50
              
              $
              12.44Third
                  Quarter
              
              $
              23.56
              
              $
              18.90
              
              $
              26.79
              
              $
              23.26Fourth
                  Quarter
              
              $
              23.40
              
              $
              18.36
              
              $
              28.09
              
              $
              20.28





**Number
      of Holders of Record**





As
      of
      October 5 ,
      2007,
      we had approximately 251 holders of record of our common stock.




**Dividend
      Policy**





We
      have
      never declared or paid cash dividends on our common stock. We currently intend
      to retain our future earnings and available cash to fund the growth of our
      business and do not expect to pay dividends in the foreseeable future. However,
      payment of dividends is within the discretion of our Board of Directors.
      Payments of dividends are limited in any one year by the revolving credit
      facility.





11




**Performance
      Graph**





The
      following graph illustrates, for the period from July 27, 2002 through July
      28,
      2007, the cumulative total shareholder return of $100 invested (assuming that
      all dividends, if any, were reinvested) in (1) our common stock, (2) the S&P
      Composite-500 Stock Index, (3) the S&P Specialty Apparel Retailers Index and
      (4) an index of four peer companies selected by us. We have chosen to use this
      peer group index in its performance graph because management believes the peer
      group index is a better reflection of our competitors in the marketplace. The
      peer group consists of all other publicly traded women’s specialty apparel
      chains known to us that we compete with directly: The Cato Corporation, Charming
      Shoppes, Inc., Deb Shops, Inc. and United Retail Group, Inc.





The
      comparisons in this table are required by the rules of the Securities and
      Exchange Commission and, therefore, are not intended to forecast or be
      indicative of possible future performance of our common stock.









12


**Securities
      Authorized for Issuance Under Equity Compensation
      Plans**





The
      following table summarizes our equity compensation plans as of July 28,
      2007.


**Plan
                  Category**
              
              **Number
                  of securities to be issued upon exercise of outstanding
                  options**
              
              **Weighted
                  average exercise price of outstanding options**
              
              **Number
                  of securities remaining available for future issuance under equity
                  compensation plans (excluding securities reflected in column
                  (a))**(a)
              
              (b)
              
              (c)Equity
                  compensation plans approved by security holders
              
              5,677,329
              
              $10.35
              
              6,475,118Equity
                  compensation plans not approved by security holders
              
              -
              
              -
              
              -**Total**
              
              5,677,329
              
              $10.35
              
              6,475,118




**Issuer
        Purchases of Equity Securities** **(1)**
 **Quarter
        Ending July 28, 2007**




**Period**
              
              **Total
                  Number of Shares Purchased**
              
              **Average
                  Price**
                **Paid
                  per Share**
              
              **Total
                  Number of Shares Purchased as Part of Publicly Announced Plans
                  or
                  Programs**
              
              **Maximum
                  Number of Shares that May Yet Be Purchased Under the Plans or Programs****(2)**April
                  29, 2007 through
                May
                  26, 2007
              
              -
              
              -
              
              -
              
              -May
                  27, 2007 through
                June
                  30, 2007
              
              -
              
              -
              
              -
              
              -July 1, 2007 through
                July
                  28, 2007
              
              1,010,000
              
              $19.74
              
              1,010,000
              
              1,542,983




(1)  We
        recently completed a $75 million stock buyback program (the “Program”) which was
        originally announced on April 5, 2001. Under the Program, we may repurchase
        our
        shares from time to time, either in the open market or through private
        transactions, whenever it appears prudent to do so. The Program has no
        expiration date. As of July 28, 2007, the remaining authorized amount for
        stock
        repurchases under the Program was $28 million which was purchased in August
        2007. In September 2007, our Board of Directors authorized an additional
        $100
        million stock buyback program. The purchases are authorized to be made by
        us
        from time to time when market conditions warrant. The 2007 stock buyback
        program
        authorizes the purchase of Dress Barn Common Stock through open market purchases
        and/or privately negotiated transactions and will be subject to applicable
        SEC
        rules
 
 (2)
              Based
                  on the closing price of $18.36 at July 27,
                  2007.




13




**ITEM 6.** **SELECTED
      FINANCIAL DATA**




The
      following selected financial data is derived from our consolidated
      financial statements and should be read in conjunction with the consolidated
      financial statements and related notes, MD&A and Quantitative and
      Qualitative Disclosures About Market Risk included in this Form
      10-K.


**Fiscal
                  Year Ended***In
                  thousands, except earnings per share*
                *and
                  store operating data*
              
              **July
                  28,**
                **2007**
              
              **July
                  29,**
                **2006**
              
              **July
                  30,**
                **2005**
              
              **July
                  31,**
                **2004**
              
              **July
                  26,**
                **2003**(2)Net
                  sales
              
              $
              1,426,607
              
              $
              1,300,277
              
              $
              1,000,264
              
              $
              754,903
              
              $
              707,121Cost
                  of sales, including occupancyandbuying
                  costs (excluding depreciation)
              
              
              842,192
              
              
              773,631
              
              
              621,656
              
              
              472,198
              
              
              451,579Selling,
                  general andadministrative expenses
              
              
              383,652
              
              
              353,031
              
              
              286,751
              
              
              212,477
              
              
              194,005Depreciation
                  and amortization
              
              
              45,791
              
              
              41,679
              
              
              34,457
              
              
              23,197
              
              
              22,262Litigation
                  (3)
              
              
              -
              
              
              -
              
              
              (35,329
              )
              
              3,329
              
              
              32,000Operating
                  income
              
              
              154,972
              
              
              131,936
              
              
              92,729
              
              
              43,702
              
              
              7,275Interest
                  income
              
              
              7,051
              
              
              2,656
              
              
              1,735
              
              
              2,204
              
              
              3,332Interest
                  expense
              
              
              (4,883
              )
              
              (5,364
              )
              
              (10,230
              )
              
              (1,959
              )
              
              (164
              )Other
                  income
              
              
              1,382
              
              
              1,526
              
              
              1,526
              
              
              1,526
              
              
              779Earnings
                  before income taxes
              
              
              158,522
              
              
              130,754
              
              
              85,760
              
              
              45,473
              
              
              11,222Income
                  taxes
              
              
              57,340
              
              
              51,800
              
              
              33,200
              
              
              14,541
              
              
              4,039**Net
                  earnings**
              
              **$**
              **101,182**
              
              **$**
              **78,954**
              
              **$**
              **52,560**
              
              **$**
              **30,932**
              
              **$**
              **7,183****Earnings
                  per share - basic (1)**
              
              **$**
              **1.63**
              
              **$**
              **1.29**
              
              **$**
              **0.88**
              
              **$**
              **0.53**
              
              **$**
              **0.12****Earnings
                  per share - diluted (1)**
              
              **$**
              **1.45**
              
              **$**
              **1.15**
              
              **$**
              **0.86**
              
              **$**
              **0.51**
              
              **$**
              **0.11****Balance
                  sheet data:**
              
              
              
              
              
              **(As
                  restated)**
              
              
              **(As
                  restated)**
              
              
              **(As
                  restated)**
              
              
              **(As
                  restated)**Working
                  capital
              
              $
              104,332
              
              $
              15,880
              
              $
              40,756
              
              $
              164,194
              
              $
              135,313Total
                  assets
              
              $
              981,325
              
              $
              842,697
              
              $
              716,245
              
              $
              489,316
              
              $
              449,787Total
                  long-term debt
              
              $
              28,540
              
              $
              29,751
              
              $
              155,900
              
              $
              31,988
              
              $
              33,021Shareholders'
                  equity
              
              $
              509,401
              
              $
              409,147
              
              $
              313,128
              
              $
              252,958
              
              $
              217,421**Percent
                  of net sales:**Cost
                  of sales, including occupancy and buying costs, excluding depreciation
                  and
                  amortization
              
              
              59.0
              %
              
              59.5
              %
              
              62.1
              %
              
              62.6
              %
              
              63.9
              %Selling,
                  general and administrative expenses
              
              
              26.9
              %
              
              27.2
              %
              
              28.7
              %
              
              28.1
              %
              
              27.4
              %Litigation
              
              
              0.0
              %
              
              0.0
              %
              
              (3.5
              %)
              
              0.4
              %
              
              4.5
              %Operating
                  income
              
              
              10.9
              %
              
              10.1
              %
              
              9.3
              %
              
              5.8
              %
              
              1.0
              %Net
                  earnings
              
              
              7.1
              %
              
              6.1
              %
              
              5.3
              %
              
              4.1
              %
              
              1.0
              %




(1)
                All earnings per share amounts reported above reflect the 2-for-1
                stock
                split, effective April 3, 2006.(2)
                Includes the impact of the acquisition of Maurices Incorporated.
                See Note
                3 to the consolidated financial statements.(3)
                See Note 4 to the consolidated financial
                statements.




14


**ITEM
      7.** **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





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 2007 refers to the 52-week period ended July 28, 2007, Fiscal
      2006 refers to the 52-week period ended July 29, 2006, and Fiscal 2005 refers
      to
      the 52-week period ended July 30, 2005. Fiscal 2008 refers to our 52-week period
      that will end on July 26, 2008.





All
      prior
      period common stock and share and per share amounts have been adjusted to
      reflect a two-for-one split of our common stock effective April 3, 2006.




During
      the fourth quarter of 2007, we completed the implementation of the Oracle Retail
      (Retek) merchandising system. We will begin utilizing this system in the first
      quarter of Fiscal 2008 for merchandising, the retail stock ledger and data
      warehousing.





During
      the fourth quarter of 2007, we accumulated enough historical data for gift
      certificates and certain merchandise credits to determine the “gift card
      breakage” rate for both **dressbarn** and **maurices** .
      This is
      further explained below in Critical Accounting Policies and Estimates under
      Revenue Recognition.





As
      more
      fully discussed below in Note 1 and Note 12 to the consolidated financial
      statements, we adopted Statement of Financial Accounting Standards ("SFAS")
      No.
      123R, Share-Based Payment (“SFAS No. 123R”), effective July 31, 2005.  We
      adopted the modified prospective transition method provided under SFAS No.
      123R
      and consequently have not retroactively adjusted results for prior
      periods.




**Restatement
      of Previously Issued Financial Statements**




In
        the
        fourth quarter of Fiscal 2007, we identified errors in the way we had previously
        classified our Convertible Senior Notes (Note 5) on our balance sheet as
        of July
        29, 2006. The balance sheet classification of the Notes between a current
        liability and a long-term liability is dependent upon certain conversion
        rights,
        as defined in Note 5 - Debt. As of January 30, 2006 and continuing through
        October 26, 2007, the holders of the Notes are able to convert their Notes
        as
        described in Note 5 because our stock price closed at or above $12.61 per
        share
        for twenty trading days within the thirty trading day period. Accordingly,
        this
        obligation should have been classified as a current liability in the
        accompanying consolidated balance sheet as of July 29, 2006. In addition
        we
        identified an error in the way we had previously classified our deferred
        compensation between current liabilities and long-term liabilities. These
        reclassifications required our balance sheet as of July 29, 2006 to be restated,
        and affected our previously reported current deferred tax assets, current
        liabilities, long-term debt, and deferred income tax liabilities as of July
        29,
        2006 and our consolidated statements of cash flows for the fiscal years ended
        July 26, 2006 and July 30, 2005 to be restated. These reclassifications do
        not
        affect the net cash provided by operating activities, net cash used in investing
        activities or net cash provided by (used in) financing activities.


See
      Note
      13 to the consolidated financial statements of this report for a summary of
      the
      effects of this restatement. These restatement adjustments did not impact our
      previously reported Consolidated Statements of Earnings, or Consolidated
      Statements of Shareholders’ Equity.




**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 necessarily 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. **maurices** introduced female plus-sizes in the fourth quarter of Fiscal 2007.




15




The
      retail environment remains very competitive. With the acquisition of **maurices**,
      we have
      diversified our core business and believe it will improve our future growth
      potential. The addition of**maurices**has
      allowed us to broaden our demographic reach and diversify our retail base.
      We
      expect to continue our strategy of opening new stores while closing
      under-performing 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 2008, we are currently projecting net square footage growth in the mid
      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, store supplies and rent. Positive comparable
      store sales contribute to greater leveraging of costs. Comparable store sales
      also have a direct impact on our total net sales, cash 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. **** It
      should
      be noted that **maurices** comparable
      store sales for Fiscal 2006 were calculated in the same manner as **dressbarn** using
      historical pre-acquisition and post-acquisition data for the comparable Fiscal
      2005 period.





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
                    28,**
                  **2007**
                
                **July
                    29,**
                  **2006**
                
                **July
                    30,**
                  **2005**Net
                    sales growth
                
                
                9.7%
                
                
                30.0%
                
                
                32.5%**dressbarn**comparable store sales
                
                
                3.8%
                
                
                9.9%
                
                
                5.0%**maurices**comparable store sales
                
                
                6.9%
                
                
                5.0%
                
                
                N/ATotal
                    comparable store sales growth
                
                
                4.8%
                
                
                8.2%
                
                
                5.0%Cost
                    of sales, including occupancy and
                  buying
                    costs, excluding depreciation
                
                
                59.0%
                
                
                59.5%
                
                
                62.1%Square
                    footage growth
                
                
                5.0%
                
                
                19.1%
                
                
                25.6%Total
                    store count
                
                
                1,428
                
                
                1,339
                
                
                1,272Diluted
                    earnings per share (1)
                
                
                $1.45
                
                
                $1.15
                
                
                $0.86SG&A
                    as a percentage of sales
                
                
                26.9%
                
                
                27.2%
                
                
                28.7%Capital
                    expenditures (in millions)
                
                
                $63.0
                
                
                $48.3
                
                
                $31.4
  (1) All
          earnings per share amounts reported above reflect the 2-for-1 stock split,
          effective April 3, 2006


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
      earnings.




16


**Results
      of Operations**





The
      table
      below sets forth certain financial data expressed as a percentage of our net
      sales for the periods indicated:


**Fiscal
                  Year Ended****July
                  28,**
                **2007**
              
              **July
                  29,**
                **2006**
              
              **July
                  30,**
                **2005**Net
                  sales
              
              
              100.0
              %
              
              100.0
              %
              
              100.0
              %Cost
                  of sales, including occupancy and buying costs,excluding
                  depreciation
              
              
              59.0
              %
              
              59.5
              %
              
              62.1
              %Selling,
                  general andadministrative
                  expenses
              
              
              26.9
              %
              
              27.2
              %
              
              28.7
              %Depreciation
                  and amortization
              
              
              3.2
              %
              
              3.2
              %
              
              3.4
              %Litigation
              
              
              0.0
              %
              
              0.0
              %
              
              (3.5
              %)Interest
                  income
              
              
              0.5
              %
              
              0.2
              %
              
              0.2
              %Interest
                  expense
              
              
              (0.3
              %)
              
              (0.4
              %)
              
              (1.0
              %)Earnings
                  before income taxes
              
              
              11.1
              %
              
              10.1
              %
              
              8.6
              %Net
                  earnings
              
              
              7.1
              %
              
              6.1
              %
              
              5.3
              %




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, a s
      appropriate.




**Fiscal
      2007 Compared to Fiscal 2006**





**Net
      Sales**





Net
      sales
      for the fifty-two weeks ended July 28, 2007 increased 9.7% to $1,426.6 million
      from $1,300.3 million in the prior year. This increase was mainly driven by
      the
      same store sales increase of 4.8% and a square footage increase of approximately
      5.0%. The same store sales increase was the result of several factors including
      increased customer traffic to our stores and more customer transactions. We
      believe the increase in the number of customer transactions was the result
      of
      continuing customer acceptance of our more updated and fashionable merchandise
      assortment and targeted marketing and store presentation efforts. Details by
      brand are as follows:





**Fifty-Two
                  Weeks Ended**(Amounts
                  in millions, except for % change amounts)
              
              **July
                  28, 2007**
              
              **July
                  29, 2006**
              
              **%
                  Change**Net
                  sales**dressbarn**and**dressbarn woman**brands
              
              $
              934.8
              
              $
              876.2
              
              
              6.7
              %**maurices**brand
              
              
              491.8
              
              
              424.1
              
              
              16.0
              %Consolidated
                  net sales
              
              $
              1,426.6
              
              $
              1,300.3
              
              
              9.7
              %




During Fiscal
      2007, the **dressbarn** brand
      showed sales strength across all regions of the country, delivering the
      fourteenth consecutive quarter of positive comparable store sales. All regions
      posted increased comparable store sales for the fifty-two week period. The
      best
      performing departments were leather and outerwear, social and dresses. The
      weakest departmental performers were suits, woven tops and coordinates.





For
      the **maurices** brand,
      the Northeast and the Northwest led regional performance. Strong sales trends
      were noted for knit tops, sweaters and denim bottoms.




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). 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. As a result, in the fourth quarter of fiscal 2007, we recognized $3.7
      million of breakage income related to unredeemed gift cards which included
      $2.6
      million for **dressbarn** and
      $1.1million for **maurices** .




17




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


Cost
      of
      sales decreased by 50 basis points to 59.0% of net sales in the current year
      period from 59.5% of net sales in the prior year period. For the **dressbarn** brand,
      cost of sales was $554.4 million or 59.3% of net sales, a decrease of 40 basis
      points as compared to $523.2 million or 59.7% from the same period last year.
      This decrease was the result of higher merchandise margins from last year mainly
      due to slightly lower markdowns and the leveraging of store occupancy costs. **maurices** cost of
      sales for Fiscal 2007 was $287.7 million or 58.5% of net sales as compared
      to
      $250.5 million or 59.1% of net sales in Fiscal 2006. The decrease in cost of
      sales was the result of increased markon and lower markdowns as well as
      leveraging occupancy, buying and distribution center costs due to the comparable
      store sales increase.





**SG&A**


As
      a
      percentage of sales, selling, general and administrative expenses (“SG&A”)
      decreased 30 basis points to 26.9% of net sales versus 27.2% last year. On
      a
      divisional basis, **dressbarn** SG&A
      decreased 60 basis points to 27.5% of net sales versus 28.1% last year due
      primarily to leveraging of payroll related expenses and other fixed costs and
      reductions in professional fees, offset by an increase in utilities. **maurices** SG&A
      was $126.1 million or 25.6% of net sales for the Fiscal 2007 as compared to
      $106.9 million or 25.2% in Fiscal 2006. The increase is primarily related to
      greater marketing investments and increased health insurance costs.





**Depreciation
      and Amortization**


Depreciation
      expense for the fifty-two week period was $45.8 million, an increase of $4.1
      million from last year. The increase is primarily due to the new store
      growth.





**Interest
      Income**


Interest
      income for the fifty-two week period was
      $7.1
      million as compared to interest income of $2.7 million last year. The increase
      was due to the increase in funds invested in marketable securities and
      investments over the fiscal year as compared to Fiscal 2006. The majority of
      our
      interest income is derived from tax-free municipal bonds and overnight tax-free
      investment funds.





**Interest
      Expense**


Interest
      expense for the fiscal year decreased to $4.9 million from $5.4 million due
      to
      lower average debt levels over the comparable prior year period. We acquired **maurices** in
      Fiscal 2005. Part of the funds for this investment were raised by issuance
      of
      $115 million of convertible senior notes, and $100 million borrowed under the
      Senior Credit Facility, as described in Note 5 to the consolidated
      financial statements. In Fiscal 2006, we repaid the remaining $10 million under
      the $100 million Senior Credit Facility.





**Other
      Income**


Other
      income for the fiscal year was $1.4 million. The majority of this amount
      represents rental income from the two tenants currently occupying space in
      our
      corporate headquarters property in Suffern, New York.





**Income
      Taxes**


The
      effective tax rate for Fiscal 2007 decreased to
      36.2%,
      as compared to 39.6% in Fiscal 2006. The income tax provision for Fiscal 2007
      was favorably impacted by $2.3 million, primarily as a result of one-time
      adjustments to certain deferred tax accounts. In addition we benefited from
      a
      lower state tax rate and higher tax exempt income. Refer to Note 9 to the
      consolidated financial statements for additional details of our income tax
      amounts.




**Fiscal
      2006 Compared to Fiscal 2005**





**Net
      Sales**


Net
      sales
      for the fifty-two weeks ended July 29, 2006 increased 30.0% to $1,300.3 million
      from $1,000.3 million in the prior year. This increase was mainly driven by
      the
      acquisition of **maurices** as well
      as by the **dressbarn** same
      store sales increase of 9.9%. The same store sales increase was the result
      of
      several factors including increased customer traffic to our stores and more
      customer transactions. We believe the increase in the number of customer
      transactions was the result of continuing customer acceptance of our more
      updated and fashionable merchandise assortment and targeted marketing and store
      presentation efforts. The fifty-two weeks ended July 30, 2005 only include
      30
      weeks of **maurices** sales
      results. The acquisition was completed as of January 1, 2005. Details by brand
      are as follows:




18




**Fifty-Two
                  Weeks Ended**(Amounts
                  in millions, except for % change amounts)
              
              **July
                  29, 2006**
              
              **July
                  30, 2005**
              
              **%
                  Change**Net
                  sales**dressbarn**and**dressbarn woman**brands
              
              $
              876.2
              
              $
              788.2
              
              
              11.2
              %**maurices**brand
              
              
              424.1
              
              
              212.1
              
              
              100.0
              %Consolidated
                  net sales
              
              $
              1,300.3
              
              $
              1,000.3
              
              
              30.0
              %




During
      the fifty-two week period, the **dressbarn** brand
      had a solid sales performance showing sales strength across all regions of
      the
      country, delivering the tenth consecutive quarter of positive comparable store
      sales. On a divisional basis, comparable store sales for the fifty-two week
      period increased 7.2% for **dressbarn** and
      15.0% for **dressbarn
      woman** . All
      regions posted increased comparable store sales for the fifty-two week period.
      The best performing departments were blouses, knits and outerwear. The weakest
      departmental performers were suits, coordinates and sweaters.





For
      the **maurices** brand,
      the Southwest (45 stores) and the Northwest (52 stores) led regional
      performance. Strong sales trends were noted for Studio Y, knit tops and jewelry.





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


Cost
      of
      sales decreased 260 basis points from 62.1% of net sales in the prior year
      period. For the **dressbarn** brand,
      cost of sales was $523.1 million or 59.7% of net sales, a decrease of 250 basis
      points as compared to $490.9 million or 62.3% of net sales for the same period
      last year. Merchandise margins increased to 56.2% from 55.0% last year mainly
      due to lower markdowns. The leveraging of store occupancy costs was achieved
      due
      to the comparable store sales performance of 9.9%. For the **maurices** brand,
      cost of sales for Fiscal 2006 was $250.5 million or 59.1% of net sales as
      compared to $130.9 million or 61.7% of net sales in Fiscal 2005, which only
      included 30 weeks of **maurices** results.
      The decrease in cost of sales was the result of increased markon and lower
      markdowns as well as leveraging occupancy, buying and distribution center
      costs.





**SG&A**


As
      a
      percentage of sales SG&A decreased 150 basis points to 27.2% of net sales
      versus 28.7% last year. On a divisional basis, **dressbarn** SG&A
      decreased 120 basis points to 28.1% of net sales versus 29.3% last year. The
      decrease was due primarily to leveraging of payroll related expenses (40 basis
      points) as a result of our 9.9% comparable store sales performance, coupled
      with
      total dollar decreases in advertising expense (20 basis points), supplies
      expense (10 basis points), telephone expenses (10 basis points), credit card
      and
      bank charges (10 basis points) and other category costs (40 basis points) for
      the 52-week period. **maurices** SG&A
      was $106.9 million or 25.2% of net sales for the Fiscal 2006 as compared to
      $56.1 million or 26.4% in Fiscal 2005, which only includes 30 weeks of **maurices** results.
      The decrease was due to the strong store selling productivity, coupled with
      reduced credit card processing rates, and other leveraged overheads. These
      savings were partially offset by higher Sarbanes-Oxley compliance costs. Our
      adoption of SFAS No. 123R resulted in the recording of compensation expense
      of
      $4.4 million for share-based payments (stock options and restricted stock)
      in
      Fiscal 2006, partially offsetting the decrease in SG&A.





**Depreciation
      and Amortization**


Depreciation
      expense for the fifty-two week period was $41.7 million, an increase of $7.2
      million from last year. This increase resulted primarily from the addition
      of **maurices** . **maurices’** depreciation expense was $15.8 million for Fiscal 2006 (52 weeks) as compared
      to
      $9.4 million in Fiscal 2005 (30 weeks).





**Interest
      Income**


Interest
      income for the fifty-two week period was $2.7 million as compared to interest
      income of $1.7 million last year. The increase was due to the increase in funds
      invested in marketable securities and investments over the fiscal year as
      compared to Fiscal 2005.





**Interest
      Expense**


Interest
      expense for the fiscal year decreased to $5.4 million from $10.2 million due
      to
      lower average debt levels over the comparable prior year period. We acquired **maurices** in
      Fiscal 2005. Part of the funds for this investment were raised by issuance
      of
      $115 million of convertible senior notes, and $100 million borrowed under the
      Senior Credit Facility, as described in Note 5 to the consolidated
      financial statements. In Fiscal 2006, we repaid the remaining $10 million under
      the $100 million senior credit facility.




19




**Other
      Income**


Other
      income for the fiscal year was $1.5 million. This amount represents rental
      income from the two tenants currently occupying space in our Corporate
      Headquarters property in Suffern, New York.





**Income
      Taxes**


The
      effective tax rate for Fiscal 2006 increased to 39.6%, as compared to 38.7%
      in
      Fiscal 2005. The effective rate increased primarily as a result of the recording
      permanent differences for compensation expense related to incentive stock
      options as a result of the adoption of SFAS 123R, reserves for various tax
      related exposures, and more nondeductible expense in Fiscal 2006 for such items
      as officers life insurance premiums and travel and entertainment expenditures.
      Refer to Note 9 to the consolidated financial statements for additional
      details of our income tax amounts.




**Liquidity
      and Capital Resources**





Cash
      generated from operating activities and available lines of credit under our
      revolving credit facility provide the primary resources to support current
      operations, growth initiatives, seasonal funding requirements and capital
      expenditures. Our uses of cash are generally for working capital, the
      construction of new stores and remodeling of existing stores, information
      technology upgrades and the purchase of short-term investments.





Our
      growth strategy includes expanding existing major trading markets, developing
      and expanding into new markets and the possibility of acquisitions. We
      periodically consider and evaluate these options to support future growth.
      In
      the event we do pursue such options, we could require additional equity or
      debt
      financing. There can be no assurance that we would be successful in closing
      any
      potential transaction, or that any endeavor we undertake would increase our
      profitability.




At
      July
      28, 2007, we had cash, cash equivalents, and marketable securities of $244.6
      million as compared to $153.0 million as of July 29, 2006. The increase in
      cash,
      cash equivalents, and marketable securities was primarily driven by generation
      of operating cash flows net of capital expenditures.





Net
      cash
      provided by operations was $155.2 million for the fifty-two
      weeks ended July 28, 2007 compared
      with $164.1 million during last year’s comparable period.  Cash
      flows from operating activities for the period were primarily generated by
      income from operations, adjusted for non-cash items such as depreciation and
      amortization, gift card breakage, and a tax benefit related to share-based
      compensation and changes in working capital account balances, specifically
      the
      other long-term liabilities, trade accounts payable, accrued expenses, accrued
      salaries and wages and customer credits, offset by the increase in merchandise
      inventories and income tax payable.





Merchandise
      inventories were $197.1 million at July 28, 2007 compared to $170.5 million
      at July 29, 2006. We believe current inventory levels are appropriate, based
      on
      sales trends and the industry environment.





As
      of
      July 28, 2007, $44 million was available under a revolving credit facility
      that
      was part of a credit agreement executed in December 2005 for future borrowings,
      which we believe gives us ample capacity to fund any short-term working capital
      needs that may arise in the operation of our business. The $44 million available
      under the credit agreement represents the $100 million from our revolving credit
      facility less $56 million of outstanding letters of credit at July 28, 2007.
      We
      also have an option to increase the revolving credit facility by $50 million.





Net
      cash
      used in investing activities was $125.6 million for the fifty-two weeks ended
      July 28, 2007. We made net
      investments of $59.0 million in marketable securities and investments during
      Fiscal 2007. We also purchased $63.0 million of property and equipment mainly
      for new store openings, store remodels and renovations and information system
      implementations during Fiscal 2007.





We
      invested $328 million in connection with our acquisition of **maurices** in
      Fiscal 2005. The funds for this investment were raised by issuance of $115
      million of convertible senior notes, $100 million borrowed under the Senior
      Credit Facility, as described in our footnotes to Consolidated Financial
      Statements and below, and the proceeds from the sale of marketable securities.
      In Fiscal 2006, we repaid the remaining balance of the Senior Credit Facility.





In
      January 2003, Dunnigan Realty, LLC, our wholly-owned consolidated subsidiary,
      purchased the Suffern facility, of which the major portion is our corporate
      offices and **dressbarn** distribution center, for approximately $45.3 million utilizing internally
      generated funds. In July 2003, Dunnigan Realty, LLC borrowed $34.0 million
      with
      a 5.33% rate mortgage loan. The mortgage has a twenty-year term with annual
      payments of $2.8 million including principal and interest and is secured by
      a
      first mortgage lien on the Suffern facility. Dunnigan Realty, LLC receives
      rental income and reimbursement for taxes and common area maintenance charges
      from two tenants that occupy the Suffern facility that are not affiliated with
      us. These unaffiliated rental payments are used to offset the mortgage payments
      and planned capital and maintenance expenditures for the Suffern facility.




20




Net
      cash
      provided by financing activities was $3.3 million during Fiscal 2007 while
      net
      cash used by financing activities was $2.8 million during Fiscal 2006. Cash
      was
      provided primarily from the exercise of stock options and the related excess
      tax
      benefits.





On
      April
      5, 2001, our Board of Directors approved a stock repurchase program in which
      we
      are authorized to purchase on the open market or in privately negotiated
      transactions up to $75 million of our common stock. We purchased approximately
      1,010,000 shares for an aggregate amount of $19.9 million in Fiscal 2007. As
      of
      Fiscal 2007, we had purchased 5,895,400 shares at an aggregate purchase
      price of approximately $46.7 million. At July 28, 2007, we had $28.3 million
      of
      purchase availability remaining which was used in August 2007. In September
      2007, our Board of Directors authorized an additional $100 million stock buyback
      program. Purchases of shares of our common stock will be made at our discretion
      from time to time, subject to market conditions and prevailing market prices.





We
      anticipate that total capital expenditures for Fiscal 2008 will be approximately
      $75 million. Of this amount, approximately $65 million is for new
      store openings, renovations and remodels, and information system
      upgrades.   W e
      plan to
      open approximately 106 additional stores in the upcoming fiscal year.





We
      do not
      have any undisclosed material transactions or commitments involving related
      persons or entities. We held no material options or other derivative instruments
      at July 28, 2007. We do not
      have any off-balance sheet arrangements or transactions with unconsolidated,
      limited purpose entities. In the normal course of business, we enter into
      operating leases for our store locations and utilize letters of credit
      principally for the importation of merchandise.





We
      believe that our cash, cash equivalents, short-term investments, and cash flow
      from operations, along with the credit agreement mentioned above, will be
      adequate to fund our planned capital expenditures and all other operating
      requirements and other proposed or contemplated expenditures.




**Contractual
      Obligations and Commercial Commitments**





The
      estimated significant contractual cash obligations and other commercial
      commitments at July 28, 2007 are summarized in the following table:


**Payments
                  Due by Period****(Amounts
                  in thousands)****Contractual
                  Obligations**
              
              **Totals**
              
              **Fiscal**
                **2008**
              
              **Fiscal
                  2009-**
                **2010**
              
              **Fiscal
                  2011-**
                **2012**
              
              **Fiscal
                  2013**
                **And
                  Beyond**Operating
                  lease obligations
              
              $
              537,737
              
              $
              144,517
              
              $
              204,823
              
              $
              117,965
              
              $
              70,432Mortgage
                  principal
              
              
              29,751
              
              
              1,211
              
              
              2,624
              
              
              2,919
              
              
              22,997Mortgage
                  interest
              
              
              14,530
              
              
              1,557
              
              
              2,911
              
              
              2,616
              
              
              7,446Convertible
                  Senior Notes (1)
              
              
              115,000
              
              
              115,000
              
              
              -
              
              
              -
              
              
              -Convertible
                  Senior Notes interest (1)
              
              
              50,313
              
              
              2,875
              
              
              5,750
              
              
              5,750
              
              
              35,938**Total**
              
              $
              747,331
              
              $
              265,160
              
              $
              216,108
              
              $
              129,250
              
              $
              136,813




(1)
      Holders of the convertible senior notes may convert their notes into cash and
      shares of our common stock at a conversion rate of 95.1430 shares per $1,000
      principal amount of convertible senior notes (equal to a conversion price of
      approximately $10.51 per share), during specified periods, if the price of
      our
      common stock reaches, or the trading price of the convertible notes falls below,
      specified thresholds, or upon the event of certain transactions. As of July
      29,
      2007 and continuing through October 27, 2007, the holders of the convertible
      senior notes may convert their notes as described above because our stock price
      closed at or above $12.61 per share for twenty trading days within the
      thirty-trading-day period ending on July 27, 2007. Upon conversion, we would
      deliver cash to the extent of the aggregate principal amount of convertible
      senior notes to be converted and our conversion obligation. The excess, if
      any,
      of the price of our common stock above $10.51 per share would be payable in
      common shares. Therefore as holders of the convertible senior notes elect to
      convert their notes, the principal amount of the notes would be currently
      payable and subsequent associated interest payments would be relinquished.
      The
      interest on the Convertible Senior Notes assumes no exercise of the conversion
      put by the holders.




21


The
      operating lease obligations represent future minimum lease payments under
      non-cancelable operating leases as of July 28, 2007. The minimum lease payments
      do not include common area maintenance (“CAM”) charges or real estate taxes,
      which are also required contractual obligations under our operating leases.
      In
      the majority of our operating leases, CAM charges are not fixed and can
      fluctuate from year to year. Total CAM charges and real estate taxes for Fiscal
      2007, Fiscal 2006 and Fiscal 2005 were $38.0 million, $36.5 million
      and $32.2 million, respectively.


**Amount
                  of Commitment Expiration Period****(Amounts
                  in thousands)****Other
                  Commercial Commitments**
              
              **Totals**
              
              **Fiscal**
                **2008**
              
              **Fiscal
                  2009-**
                **2010**
              
              **Fiscal
                  2011-**
                **2012**
              
              **Fiscal
                  2013**
                **And
                  Beyond**Trade
                  letters of credit
              
              $
              49,221
              
              $
              49,221
              
              $
              -
              
              $
              -
              
              $
              -Standby
                  letters of credit
              
              
              6,447
              
              
              6,447
              
              
              -
              
              
              -
              
              
              -Firm
                  purchase orders
              
              
              863
              
              
              863
              
              
              -
              
              
              -
              
              
              -**Total**
              
              $
              56,531
              
              $
              56,531
              
              $
              -
              
              $
              -
              
              $
              -




In
      addition to the commitments represented in the above table, we enter into a
      number of cancelable and non-cancelable commitments during the year. Typically,
      these commitments are for less than a year in duration and are principally
      focused on the construction of new retail stores and the procurement of
      inventory. We do not maintain any long-term or exclusive commitments or
      arrangements to purchase merchandise from any single supplier. Preliminary
      commitments with our private label merchandise vendors typically are made five
      to seven months in advance of planned receipt date. Substantially all of our
      merchandise purchase commitments are cancelable up to 30 days prior to the
      vendor’s scheduled shipment date.





**Recent
      accounting pronouncements**





In
      June
      2006, the Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task
      Force reached a consensus on Issue No. 06-3, *“How
      Taxes Collected from Customers and Remitted to Governmental Authorities Should
      be Presented in the Income Statement (That Is, Gross versus Net
      Presentation)”* (“EITF
      06-3”). EITF 06-3 includes sales, use, value-added and some excise taxes that
      are assessed by a governmental authority on specific revenue-producing
      transactions between a seller and a customer. EITF 06-3 requires disclosure
      of
      the method of accounting for the applicable assessed taxes and the amount of
      assessed taxes included in revenues if such taxes are accounted for under the
      gross method. EITF 06-3 is effective for interim and annual periods beginning
      after December 15, 2006. The adoption of EITF 06-3 did not have a material
      impact on our consolidated financial position, results of operations or cash
      flows.





In
      June
      2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), *Accounting
      for Uncertainty in Income Taxes — an interpretation of FASB Statement No.
      109* ,
      which
      clarifies the accounting for uncertainty in income taxes recognized in financial
      statements in accordance with FASB Statement No. 109, Accounting for Income
      Taxes. FIN 48 provides guidance on the financial statement recognition and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48 requires that companies recognize in their consolidated financial statements
      the impact of a tax position that is more likely than not to be sustained upon
      examination based on the technical merits of the position. The first step is
      to
      evaluate the tax position for recognition by determining if the weight of
      available evidence indicates it is more likely than not that the position will
      be sustained on audit, including resolution of related appeals or litigation
      processes, if any. The second step is to measure the tax benefit as the largest
      amount that is more than 50% likely of being realized upon ultimate settlement.
      FIN 48 also provides guidance on derecognition, classification, interest and
      penalties, accounting in interim periods, disclosures, and transition. FIN
      48 is
      effective for fiscal years beginning after December 15, 2006 (our Fiscal 2008). The
      adoption of FIN 48 is not expected to have a material effect on our consolidated
      financial position or results of operations.





In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* ,
      which
      defined fair value, establishes a framework for measuring fair value under
      GAAP,
      and expands disclosures about fair value measurements. SFAS No. 157 applies
      to
      other accounting pronouncements that require or permit fair value measurement.
      SFAS No. 157 is effective for financial statements issued for fiscal years
      beginning after November 15, 2007 (our Fiscal 2009), and for interim periods
      within those fiscal years. We have not completed our evaluation of the potential
      impact, if any, of the adoption of SFAS No. 157 on our consolidated financial
      position, results of operations and cash flows.





In
      September 2006, the Securities and Exchange Commission (SEC) issued Staff
      Accounting Bulletin (SAB) No. 108, *Considering
      the Effects of Prior Year Misstatements When Quantifying Misstatements in
      Current Year Financial Statements* ,
      which
      provides interpretive guidance on the consideration of the effects of prior
      year
      misstatements in quantifying current year misstatements for the purpose of
      materiality assessment. SAB No. 108 is effective for fiscal years ending after
      November 15, 2006 (our Fiscal 2007). The cumulative effect, if any, of applying
      the provisions of SAB No. 108 is reported as an adjustment to beginning-of-year
      retained earnings. We adopted SAB 108 during fourth quarter of Fiscal 2007. The
      adoption of SAB 108 did not have an impact on our consolidated financial
      position, results of operations or cash flows.





22





In
      February 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities - Including
      an
      Amendment of FASB Statement No. 115* ,
      which
      provides companies with an option to measure, at specified election dates,
      many
      financial instruments and certain other items at fair value that are not
      currently measured at fair value. A company will report unrealized gains and
      losses on items for which the fair value option has been elected in earnings
      at
      each subsequent reporting date. This Statement also establishes presentation
      and
      disclosure requirements designed to facilitate comparisons between entities
      that
      choose different measurement attributes for similar types of assets and
      liabilities. SFAS 159 is effective as of the beginning of an entity’s first
      fiscal year that begins after November 15, 2007 (our Fiscal 2009). We have
      not
      completed our evaluation of the potential impact, if any, of the adoption of
      SFAS No. 159 on our consolidated financial position, results of operations
      and
      cash flows.





**Seasonality**





The **dressbarn** and **maurices** brands
      have historically experienced substantially lower earnings in our second fiscal
      quarter ending in January than during our other three fiscal quarters,
      reflecting the intense promotional atmosphere that has characterized the holiday
      shopping season in recent years. We expect this trend to continue for Fiscal
      2008. In addition, our quarterly results of operations may fluctuate materially
      depending on, among other things, increases or decreases in same store sales,
      adverse weather conditions, shifts in timing of certain holidays, the timing
      of
      new store openings, net sales contributed by new stores, and changes in our
      merchandise mix.





**Critical
      Accounting Policies and Estimates**





Our
      accounting policies are more fully described in Note 1 to the Consolidated
      Financial Statements. Management’s discussion and analysis of our financial
      condition and results of operations are based upon our consolidated financial
      statements, which have been prepared in accordance with accounting principles
      generally accepted in the United States of America. The preparation of these
      financial statements requires us to make estimates and judgments that affect
      the
      reported amounts of assets, liabilities, revenues and expenses, income taxes
      and
      related disclosures of contingent assets and liabilities. On an ongoing basis,
      we evaluate estimates, including those related primarily to merchandise
      inventories, long-lived assets, insurance reserves, income taxes, stock-based
      employee compensation, claims and contingencies and litigation. We base our
      estimates on historical experience and on various other assumptions that are
      believed to be reasonable under the circumstances, the results of which form
      the
      basis for making judgments about the carrying values of assets and liabilities
      that are not readily apparent from other sources. Actual results may differ
      from
      these estimates under different assumptions or conditions. Management believes
      the following accounting principles are the most critical because they involve
      the most significant judgments, assumptions and estimates used in preparation
      of
      our financial statements.





*Revenue
      Recognition*





While
      our
      recognition of revenue does not involve significant judgment, revenue
      recognition represents an important accounting policy of ours. As discussed
      in
      Note 1 to the Consolidated Financial Statements, we recognize sales at the
      point
      of purchase when the customer takes possession of the merchandise and pays
      for
      the purchase, generally with cash or credit card. We have reserved for estimated
      product returns when sales are recorded based on historical return trends and
      adjusted for known events, as applicable.




Sales
      from purchases made with gift cards, gift certificates, and layaway sales are
      recorded when the customer takes possession of the merchandise. Gift cards,
      gift
      certificates and merchandise credits (collectively “gift cards”) do not have
      expiration dates. We recognize income on unredeemed gift cards (“gift card
      breakage”) 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 Fiscal 2005. 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. As a result, in the fourth quarter of Fiscal 2007, we recognized $3.7
      million of breakage income related to unredeemed gift cards which included
      $2.6
      million for**dressbarn**and
      $1.1million for**maurices**.





*Cash
      and cash equivalents*





We
      consider our highly liquid investments with maturities of three months or less
      when purchased to be cash equivalents. These amounts are stated at cost, which
      approximates market value. We also consider receivables related to credit card
      purchases to be equivalent to cash. The majority of our money market funds
      at
      July 28, 2007 were maintained with one financial institution. We maintain
      cash deposits and cash equivalents with well-known and stable financial
      institutions. However, we have significant amounts of cash and cash equivalents
      at these financial institutions that are in excess of federally insured limits.
      This represents a concentration of credit risk. We have not experienced any
      losses on our deposits of cash and cash equivalents to date.




23




*Merchandise
      Inventories*





Our
      inventory is valued using the retail method of accounting and is stated at
      the
      lower of cost, on a First In, First Out (“FIFO”) basis, or market. Under the
      retail inventory method, the valuation of inventory at cost and resulting gross
      margin are calculated by applying a calculated cost to retail ratio to the
      retail value of inventory. The retail inventory method is an averaging method
      that has been widely used in the retail industry due to its practicality. We
      include in the 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, all occupancy costs excluding depreciation and all costs
      associated with our buying and distribution functions. Inherent in the retail
      method are certain significant management judgments and estimates including,
      among others, initial merchandise markup, markdowns and shrinkage, which
      significantly impact the ending inventory valuation at cost as well as the
      resulting gross margins. Physical inventories are conducted in the third and
      fourth quarters to calculate actual shrinkage and inventory on hand. Estimates
      are used to charge inventory shrinkage for the first, second, and third fiscal
      quarters of the fiscal year. We continuously review our inventory levels to
      identify slow-moving merchandise and broken assortments, using markdowns to
      clear merchandise, which reduces the cost of inventories to its estimated net
      realizable value. Consideration is given to a number of quantitative factors,
      including anticipated subsequent markdowns and aging of inventories. To the
      extent that actual markdowns are higher or lower than estimated, our gross
      margins could increase or decrease and, accordingly, affect our financial
      position and results of operations. A significant variation between the
      estimated provision and actual results could have a substantial impact on our
      results of operations.





*Impairment
      of Long-lived Assets*




We
      primarily invest in property and equipment in connection with the opening and
      remodeling of stores. When facts and circumstances indicate that the carrying
      values of such long-lived assets may be impaired, an evaluation of
      recoverability is performed by comparing the carrying values of the assets
      to
      projected future cash flows, in addition to other quantitative and qualitative
      analyses. Upon indication that the carrying values of such assets may not be
      recoverable, we recognize an impairment loss as a charge against current
      operations. Property and equipment assets are grouped at the lowest level for
      which there is identifiable cash flows when assessing impairment, which is
      the
      individual store level. Judgments
      made by us related to the expected useful lives of long-lived assets and our
      ability to realize undiscounted cash flows in excess of the carrying amounts
      of
      such assets are affected by factors such as the ongoing maintenance and
      improvements of the assets, changes in economic conditions and changes in
      operating performance. In
      addition, we regularly evaluate our computer-related and other assets and revise
      the depreciation over the estimated useful life if the asset is no longer in
      use
      or has limited future value.





*Insurance
      Reserves*





We
      use a
      combination of insurance and self-insurance mechanisms to provide for the
      potential liabilities for workers’ compensation and employee healthcare
      benefits. Liabilities associated with the risks that are retained by us are
      estimated, in part, by considering historical claims experience, demographic
      factors, severity factors and other actuarial assumptions. Such liabilities
      are
      capped through the use of stop loss contracts with insurance companies. The
      estimated accruals for these liabilities could be significantly affected if
      future occurrences and claims differ from these assumptions and historical
      trends. As of July 28, 2007 and July 29, 2006, these reserves were
      $8.4 million and $7.8 million, respectively. We
      are
      subject to various claims and contingencies related to insurance and other
      matters arising out of the normal course of business. We are self-insured for
      expenses related to our employee medical and dental plans, and our workers’
compensation plan, up to certain thresholds. Claims filed, as well as claims
      incurred but not reported, are accrued based on management’s estimates, using
      information received from plan administrators, historical analysis and other
      relevant data. We have stop-loss insurance coverage for individual claims in
      excess of $250,000. We believe our accruals for claims and contingencies are
      adequate based on information currently available. However, it is possible
      that
      actual results could significantly differ from the recorded accruals for claims
      and contingencies.





*Goodwill
      and other intangible assets*





Goodwill
      represents the excess of the purchase price over the fair values of net
      identifiable assets acquired. In accordance with Statement of Financial
      Accounting Standards No. 142, *Goodwill
      and Other Intangible Asset* s
      (“SFAS
      No. 142”), we do not amortize goodwill or intangible assets with indefinite
      lives but, rather, we are required to evaluate goodwill and intangible assets
      with indefinite lives annually or whenever events or changes in circumstances
      indicate that the carrying amount may not be recoverable. The conditions that
      would trigger an impairment of goodwill or intangible assets with indefinite
      lives include a significant, sustained negative trend in **maurices** ’
      operating results or cash flows, a decrease in demand for **maurices** products, a change in the competitive environment or other industry and economic
      factors. Goodwill and intangible assets with indefinite lives are evaluated
      for
      impairment annually under the provisions of SFAS No. 142. Our annual assessment
      date is on or about June 30 th .





24




*Operating
      Leases*





We
      lease
      retail stores under operating leases. Most lease agreements contain construction allowances, rent holidays, lease premiums, rent escalation clauses
      and/or contingent rent provisions. For purposes of recognizing incentives,
      premiums and minimum rental expenses on a straight-line basis over the terms
      of
      the leases, we use the date of initial possession to begin amortization, which
      is generally when we enter the space and begin to make improvements in
      preparation of intended use.





For
      construction allowances and rent holidays, we record a deferred rent liability
      in “Other accrued expenses” and “Deferred rent” on the consolidated balance
      sheets and amortize the deferred rent over the terms of the leases as reductions
      to “Cost of sales including occupancy and buying costs” on the consolidated
      statements of earnings.





For
      scheduled rent escalation clauses during the lease terms or for rental payments
      commencing at a date other than the date of initial occupancy, we record minimum
      rental expenses on a straight-line basis over the terms of the leases on the
      consolidated statements of earnings.





Certain
      leases provide for contingent rents, which are determined as a percentage of
      gross sales in excess of specified levels. We record a contingent rent liability
      in “Other accrued expenses” on the consolidated balance sheets and the
      corresponding rent expense when specified levels have been achieved or when
      management determines that achieving the specified levels during the fiscal
      year
      is probable.





*Leases
      with related parties*





We
      lease
      two stores from its Chairman or related trusts. Future minimum rentals under
      leases with such related parties which extend beyond July 28, 2007 are
      approximately $312,000 annually and in the aggregate $1.1 million. The leases
      also contain provisions for cost escalations and additional rent based on net
      sales in excess of stipulated amounts. Rent expense for Fiscal years 2007,
      2006
      and 2005 under these leases amounted to approximately $389,000, $364,000 and
      $335,000, respectively.





*Income
      Taxes*





We
      do
      business in various jurisdictions that impose income taxes. Management
      determines the aggregate amount of income tax expense to accrue and the amount
      currently payable based upon the tax statutes of each jurisdiction. This process
      involves adjusting income determined using generally accepted accounting
      principles for items that are treated differently by the applicable taxing
      authorities. Deferred taxes are provided using the asset and liability method,
      whereby deferred income taxes result from temporary differences between the
      reported amounts in the financial statements and the tax basis of assets and
      liabilities, as measured by current tax rates. We establish valuation allowances
      against deferred tax assets when it is more likely than not that the realization
      of those deferred tax assets will not occur. We accrue for estimates of probable
      settlements of Federal and State tax audits when they are more likely than
      not
      to be settled. At any one time, many tax years are subject to audit by various
      taxing jurisdictions. The results of these audits and negotiations with taxing
      authorities may affect the ultimate settlement of these issues. We believe
      our
      accruals for claims and contingencies are adequate based on information
      currently available. However, it is possible that actual results could
      significantly differ from the recorded accruals for claims and
      contingencies.




25





**ITEM
      7A.** **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





Changes
      in market interest rates can affect our investments of cash, cash equivalents
      and marketable securities. Financial instruments, which potentially subject
      us
      to concentrations of credit risk, are principally bank deposits and short-term
      money market investments. Cash and cash equivalents are deposited with high
      credit quality financial institutions. Short-term investments principally
      consist of triple A or double A rated instruments. The carrying amounts of
      cash,
      cash equivalents, short-term investments and accounts payable approximate fair
      value because of the short-term nature and maturity of such instruments.
      Additionally, adverse changes in interest rates will not have a material affect
      on our financial condition due to the short-term nature of these
      investments.





Our
      outstanding long-term liabilities as of July 28, 2007 consisted of $28.5 million
      of our 5.3% mortgage loan due July 1, 2023. As the mortgage loan bears interest
      at a fixed rate, our results of operations would not be affected by interest
      rate changes.





On
      December 15, 2004, we issued $115 million of convertible senior notes. As the
      convertible senior notes bear interest at a fixed rate, our results of
      operations would not be affected by interest rate changes.  On
      July
      27, 2007, the market value of the Convertible Senior Notes was $215.3 million
      as
      valued on PORTAL (Private Offering Resale and Trading through Automated
      Linkage).





We
      also
      entered into a $100 million senior credit facility with a group of banks on
      December 21, 2005. Under that senior credit facility, we have available a
      revolving credit facility with borrowings of up to $100 million at a variable
      rate. At July 28, 2007, we had no outstanding borrowings under the revolving
      credit facility. As of July 28, 2007, we had used $56 million of the $100
      million revolving credit facility for outstanding letters of credit leaving
      a
      net available balance of $44 million.





We
      hold
      no material options or other derivative instruments at July 28, 2007.





Accordingly,
      we do not believe that there is any material market risk exposure with respect
      to derivative or other financial instruments that would require disclosure
      under
      this item.





**ITEM
      8.** **FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA**





The
      consolidated financial statements of The Dress Barn, Inc. and subsidiaries
      are
      filed together with this report: See Index
      to Financial Statements, Item 15.




**ITEM
      9.** **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**




None.




**ITEM
      9A.** **CONTROLS
      AND PROCEDURES**




**(a)
      Evaluation of Disclosure Controls and Procedures**




We
      conducted an evaluation, under the supervision and with the participation of
      management, including the Chief Executive Officer and Chief Financial Officer,
      of the effectiveness of the design and operation of our disclosure controls
      and
      procedures (as such term is defined in Rules 13a−15(e) and 15d−15(e) under the
      Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of July 28,
      2007. There are inherent limitations to the effectiveness of any system of
      disclosure controls and procedures, including the possibility of human error
      and
      the circumvention or overriding of the controls and procedures. Accordingly,
      even effective disclosure controls and procedures can only provide reasonable
      assurance of achieving their control objectives. Our disclosure controls and
      procedures are designed to provide reasonable assurance of achieving their
      control objectives. Based on such evaluation, the Chief Executive Officer and
      Chief Financial Officer concluded that our disclosure controls and procedures
      were effective at the reasonable assurance level as of the end of the period
      covered and in ensuring that information required to be disclosed in the reports
      that we file or submit under the Exchange Act is recorded, processed, summarized
      and reported within the time periods specified in the Commission’s rules
      and forms and is accumulated and communicated to our management, including
      the
      Chief Executive Officer and Chief Financial Officer, to allow timely decisions
      regarding required disclosure.




**(b)
      Management’s Report of Internal Control over Financial
      Reporting**





M anagement
      is responsible for establishing and maintaining adequate internal control over
      financial reporting as defined in Rules 13a−15(f) and 15d−15(f) under the
      Exchange Act. Our internal control system over financial reporting is designed
      to provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. Because of inherent limitations,
      internal control over financial reporting may not prevent or detect
      misstatements. Also, projections of any evaluation of effectiveness to future
      periods are subject to the risk that controls may become inadequate because
      of
      changes in conditions, or that the degree of compliance with the policies or
      procedures may deteriorate.




26




Management
      has assessed the effectiveness of our internal control over financial reporting
      as of July 28, 2007. In making this assessment, management used the criteria
      established in *Internal
      Control - Integrated Framework* issued
      by
      the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
      Based on the assessment and those criteria, management believes that we
      maintained effective internal control over financial reporting as of July 28,
      2007. Our independent registered public accounting firm has issued an
      attestation report on our internal control over financial reporting. The report
      appears herein below.





**(c)
      Changes in Internal Controls Over Financial Reporting**





During
      the fourth quarter of Fiscal 2007, we engaged the same outside service provider
      that tracks our stock option activity to also perform the calculation of
      compensation expense relating to stock options activity of our stock option
      plan.  As appropriate, we have modified the design and documentation of
      internal control process and procedures relating to the change to supplement
      and
      complement existing internal controls over financial reporting. Other than
      the
      above, there was no change in our internal control over financial reporting
      during the quarterly period covered by this report that has materially affected,
      or is reasonably likely to materially affect, our internal control over
      financial reporting.


**(d)
        Report of Independent Registered Public Accounting Firm on Internal Control
        Over
        Financial Reporting**
  REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To
        the
        Board of Directors and Stockholders of
 The
        Dress
        Barn, Inc.
 Suffern,
        New York
  We
        have
        audited The Dress Barn, Inc. and subsidiaries' (the "Company's") internal
        control over financial reporting as of July 28, 2007, based on criteria
        established in *Internal
        Control — Integrated Framework* issued
        by
        the Committee of Sponsoring Organizations of the Treadway Commission.  The
        Company's management is responsible for maintaining effective internal control
        over financial reporting and for its assessment of the effectiveness of internal
        control over financial reporting, included in the accompanying Management’s
        Report of Internal Control over Financial Reporting.  Our responsibility is
        to express an opinion on the Company's internal control over financial reporting
        based on our audit.
  We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States).  Those standards require that
        we plan and perform the audit to obtain reasonable assurance about whether
        effective internal control over financial reporting was maintained in all
        material respects.  Our audit included obtaining an understanding of
        internal control over financial reporting, assessing the risk that a material
        weakness exists, testing and evaluating the design and operating effectiveness
        of internal control based on that risk, and performing such other procedures
        as
        we considered necessary in the circumstances.  We believe that our audit
        provides a reasonable basis for our opinion.
  A
        company's internal control over financial reporting is a process designed
        by, or
        under the supervision of, the company's principal executive and principal
        financial officers, or persons performing similar functions, and effected
        by the
        company's board of directors, management, and other personnel to provide
        reasonable assurance regarding the reliability of financial reporting and
        the
        preparation of financial statements for external purposes in accordance with
        generally accepted accounting principles.  A company's internal control
        over financial reporting includes those policies and procedures that (1)
        pertain
        to the maintenance of records that, in reasonable detail, accurately and
        fairly
        reflect the transactions and dispositions of the assets of the company; (2)
        provide reasonable assurance that transactions are recorded as necessary
        to
        permit preparation of financial statements in accordance with generally accepted
        accounting principles, and that receipts and expenditures of the company
        are
        being made only in accordance with authorizations of management and directors
        of
        the company; and (3) provide reasonable assurance regarding prevention or timely
        detection of unauthorized acquisition, use, or disposition of the company's
        assets that could have a material effect on the financial
        statements.
  Because
        of the inherent limitations of internal control over financial reporting,
        including the possibility of collusion or improper management override of
        controls, material misstatements due to error or fraud may not be prevented
        or
        detected on a timely
        basis.  Also, projections of any evaluation of the effectiveness of the
        internal control over financial reporting to future periods are subject to
        the
        risk that the controls may become inadequate because of changes in conditions,
        or that the degree of compliance with the policies or procedures may
        deteriorate.
  In
        our
        opinion, the Company maintained effective internal control over financial
        reporting as of July 28, 2007, based on the criteria established in *Internal
        Control — Integrated Framework* issued
        by
        the Committee of Sponsoring Organizations of the Treadway
        Commission.
  We
        have
        also audited, in accordance with the standards of the Public Company Accounting
        Oversight Board (United States), the consolidated financial statements as
        of and
        for the year ended July 28, 2007 of the Company and our report dated October
        8,
        2007 expressed an unqualified opinion on those financial statements.
 
 /s/
        Deloitte & Touche LLP
  New
        York,
        New York
 October
        8, 2007


27


**ITEM
        9B.** **OTHER
        INFORMATION**
 
 None.
  28


**PART
      III**




**ITEM
      10.**  **DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**





Information
      with respect to this item is incorporated by reference from our definitive
      Proxy
      Statement to be filed with the SEC not later than 120 days after the end of
      our
      fiscal year.   We
      have
      adopted a Code of Ethics for the Chief Executive Officer and Senior Financial
      Officers. The Code of Ethics for the Chief Executive Officer and Senior
      Financial Officers is posted on our website, www.dressbarn.com ,
      then
“Investor Relations”, then under the Investors Relations pull-down menu, click
      on “Code of Ethics”. We intend to satisfy the disclosure requirement regarding
      any amendment to, or a waiver of, a provision of the Code of Ethics by posting
      such information on our website. We undertake to provide to any person a copy
      of
      this Code of Ethics upon request to our Secretary at our principal executive
      offices.




**ITEM
      11.**  **EXECUTIVE
      COMPENSATION**





Information
      with respect to this item is incorporated by reference from our definitive
      Proxy
      Statement to be filed with the SEC not later than 120 days after the end of
      our
      fiscal year.




**ITEM
      12.**  **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER**


**MATTERS**





Information
      with respect to this item is incorporated by reference from our definitive
      Proxy
      Statement to be filed with the SEC not later than 120 days after the end of
      our
      fiscal year.




**ITEM
      13.**  **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE**





Information
      with respect to this item is incorporated by reference from our definitive
      Proxy
      Statement to be filed with the SEC not later than 120 days after the end of
      our
      fiscal year.




**ITEM
      14.**  **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**




The
      information with respect to this item is incorporated by reference from our
      definitive Proxy Statement to be filed with the SEC not later than 120 days
      after the end of our fiscal year.




29




**PART
      IV**





**ITEM
      15.** **EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES**




**ITEM
                  15. (a) (1) FINANCIAL STATEMENTS**
              **PAGE
                  NUMBER**Report
                  of Independent Registered Public Accounting Firm
              F-1Consolidated
                  Balance Sheets
              F-2Consolidated
                  Statements of Earnings
              F-4Consolidated
                  Statements of Shareholders' Equity and Comprehensive
                  Income
              F-5Consolidated
                  Statements of Cash Flows
              F-6Notes
                  to Consolidated Financial Statements
              F-8





**ITEM
      15. (a) (2) FINANCIAL STATEMENT SCHEDULES**





All
      schedules are omitted because they are not applicable, or not required because
      the required information is included in the consolidated financial statements
      or
      notes thereto.




**ITEM
      15. (b) LIST OF EXHIBITS**





The
      following exhibits are filed as part of this Report and except Exhibits 3.4,
      21,
      23, 31.1, 31.2, 32.1 and 32.2 are all incorporated by reference (utilizing
      the
      same exhibit numbers) from the sources shown.




Exhibit
              
              Incorporated
                  ByNumber
              Description
              Reference
                  From3.1
              1983
                  Amended and Restated Certificate of Incorporation
              (1)3.2
              Amendments
                  to Amended and Restated Certificate of Incorporation
              (2)3.3
              Amendment
                  to Certificate of Incorporation, filed with the
                  Connecticut
              (3)Secretary
                  of State on December 19, 20053.4
              Amended
                  and Restated By-Laws (as amended through May 31, 2007)4
              Specimen
                  Common Stock Certificate
              (1)10.1
              Purchase
                  and Sale Agreement, dated January 28, 2003,
              (5)Between
                  Rockland Warehouse Center Corporation, as seller,and
                  Dunnigan Realty, LLC, as buyer with respect to30
                  Dunnigan Drive, Suffern, NY10.2
              $34,000,000
                  mortgage loan from John Hancock Life Insurance
              (6)Company
                  to Dunnigan Realty, secured by mortgage on 30Dunnigan
                  Drive, Suffern, NY10.3
              Leases
                  of Company premises of which the lessor is Elliot S. Jaffeor
                  members of his family or related trusts:10.6.1
                  Danbury, CT store
              (1)10.6.2
                  Norwalk, CT**dressbarn**/**dressbarn**Woman store
              (7)
  30
  10.4
              Amended
                  and Restated Lease between Dunnigan Realty, LLC, as
                  landlord,and
                  The Dress Barn, Inc., as tenant, dated June 24, 2003 for officeand
                  distribution space in Suffern, New York
              (6)10.5
              The
                  Dress Barn, Inc. 1993 Incentive Stock Option Plan
              (8)
                  *10.6
              The
                  Dress Barn, Inc. 1995 Stock Option Plan
              (9)
                  *10.7
              The
                  Dress Barn, Inc. 2001 Stock Incentive Plan (amended and
                  restated
              (10)
                  *effective
                  September 29, 2005)10.8
              Employment
                  Agreement with Elliot S. Jaffedated
                  May 2, 2002
              (11)
                  *10.9
              Amendment
                  dated July 10, 2006 to Employment Agreement dated
              (12)
                  *May
                  2, 2002 with Elliot S. Jaffe10.10
              Employment
                  Agreement dated May 2, 2002 with David R. Jaffe
              (11)
                  *10.11
              Employment
                  Agreement dated August 28, 2002 with Vivian Behrens
              (13)
                  *10.12
              Employment
                  Agreement dated July 26, 2005 with Gene Wexler
              (14)
                  *10.13
              *
                  Supplemental Retirement Benefit Agreement with Mrs. Roslyn
                  Jaffe
              (15)dated
                  August 29, 200610.14
              Consulting
                  Agreement dated July 18, 2006 with Burt Steinberg Retail
              (16)
                  *.
              Consulting
                  Ltd10.15
              The
                  Dress Barn Inc. 2.5% Convertible Senior Notes due 2024
              (17)10.16
              Credit
                  Agreement dated as of December 21, 2005
              (18)10.17
              Stock
                  Purchase Agreement dated November 16, 2004Among
                  The Dress Barn, Inc., Maurices Incorporated andAmerican
                  Retail Group, Inc.
              (19)14
              Code
                  of Ethics for the Chief Executive Officer and Senior Financial
                  Officers
              (6)21
              Subsidiaries
                  of the Registrant23
              Consent
                  of Independent Registered Public Accounting Firm31.1
              Section
                  302 Certification of President and Chief Executive Officer31.2
              Section
                  302 Certification of Chief Financial Officer32.1
              Section
                  906 Certification of President and Chief Executive Officer32.2
              Section
                  906 Certification of Chief Financial Officer





31




References
      as follows:


(1)
            The
                Company's Registration Statement on Form S-1 under the Securities
                Actof
                1933 (Registration No. 2-82916) declared effective May 4,
                1983.(2)
            The
                Company's Annual Report on Form 10-K for the fiscal year ended July
                30,
                1988.(3)
            The
                Company’s Registration Statement on Form S-8 under the Securities
                Actof
                1933 (Registration No. 333-136061).(4)
            Omitted.(5)
            The
                Company’s Quarterly Report on Form 10-Q for the quarter ended January 25,
                2003.(6)
            The
                Company’s Annual Report on Form 10-K for the fiscal year ended July 26,
                2003.(7)
            The
                Company’s Annual Report on Form 10-K for the fiscal year ended July 25,
                1992.(8)
            The
                Company's Registration Statement on Form S-8 under the Securities
                Actof
                1933 (Registration No. 33-60196) filed on March 29,
                1993.(9)
            The
                Company's Annual Report on Form 10-K for the fiscal year ended July
                27,
                1996.(10)
            The
                Company's Proxy Statement dated October 31, 2005, filed October 31,
                2005.(11)
            The
                Company's Annual Report on Form 10-K for the fiscal year ended July
                27,
                2002.(12)
            The
                Company’s Report on Form 8-K filed July 13, 2006.(13)
            The
                Company's Quarterly Report on Form 10-Q for the quarter ended October
                26,
                2002.(14)
            The
                Company’s Annual Report on Form 10-K for the fiscal year ended July 30,
                2005.(15)
            The
                Company’s Report on Form 8-K filed August 30, 2006.(16)
            The
                Company’s Report on Form 8-K filed July 19, 2006.(17)
            The
                Company's Registration Statement on Form S-1 under the Securities
                Actof
                1933 (Registration No. 333-124512) filed on May 02, 2005.(18)
            The
                Company’s Report on Form 8-K filed December 23, 2005.(19)
            The
                Company’s Report on Form 8-K filed November 17,
                2004.





*
      Each of
      these exhibits constitute a management contract, compensatory plan or
      arrangement required to be filed as an exhibit pursuant to Item 15 (b) of this
      report.




**ITEM
      15. (c) EXHIBITS**




All
      exhibits are incorporated by reference as shown in Item 15(b), except Exhibits
      3.4, 21, 23, 31.1, 31.2, 32.1 and 32.2, which are filed as part of this
      Report.




32





**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the
      registrant has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.




The
              Dress Barn,
              Inc.By:
            /s/
              DAVID R. JAFFEDavid
              R. JaffePresident
              and
              Chief Executive Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.




**Signature**
              **Title**
              **Date**/s/
                  ELLIOT S. JAFFE
              
              10/10/07Elliot
                  S. Jaffe
              Chairman
                  of the Board/s/
                  DAVID R. JAFFE
              
              10/10/07David
                  R. Jaffe
              Director,
                  Presidentand
                  Chief Executive Officer(Principal
                  Executive Officer)/s/
                  BURT STEINBERG
              
              10/10/07Burt
                  Steinberg
              Director
                  and Executive Director/s/
                  KLAUS EPPLER
              
              10/10/07Klaus
                  Eppler
              Director/s/
                  RANDY L. PEARCE
              
              10/10/07Randy
                  L. Pearce
              Director/s/
                  JOHN USDAN
              
              10/10/07John
                  Usdan
              Director/s/
                  KATE BUGGELN
              Director
              10/10/07Kate
                  Buggeln/s/
                  ARMAND CORREIA
              
              10/10/07Armand
                  Correia
              Chief
                  Financial Officer (PrincipalFinancial
                  and Accounting Officer)




33




REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To
        the
        Board of Directors and Stockholders of
 The
        Dress
        Barn, Inc.
 Suffern,
        New York
  We
        have
        audited the accompanying consolidated balance sheets of The Dress Barn, Inc.
        and
        subsidiaries (the "Company") as of July 28, 2007 and July 29, 2006, and the
        related consolidated statements of earnings, shareholders' equity and
        comprehensive income, and cash flows for each of the three fiscal years in
        the
        period ended July 28, 2007.  These financial statements are the
        responsibility of the Company's management.  Our responsibility is to
        express an opinion on these financial statements based on our
        audits.
  We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States).  Those standards require that
        we plan and perform the audit to obtain reasonable assurance about whether
        the
        financial statements are free of material misstatement.  An audit includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements.  An audit also includes assessing the accounting
        principles used and significant estimates made by management, as well as
        evaluating the overall financial statement presentation.  We believe that
        our audits provide a reasonable basis for our opinion.
  In
        our
        opinion, such consolidated financial statements present fairly, in all material
        respects, the financial position of the Company and subsidiaries as of July
        28,
        2007 and July 29, 2006, and the results of their operations and their cash
        flows
        for each of the three fiscal years in the period ended July 28, 2007, in
        conformity with accounting principles generally accepted in the United States
        of
        America.
  As
        discussed in Note 1 to the consolidated financial statements, the Company
        adopted Statement of Accounting Standards No. 123(R), “Share-Based Payment,” as
        revised, as of July 31, 2005.
 
 As
        discussed in Note 13, the accompanying consolidated balance sheet as of July
        29,
        2006 and the consolidated statements of cash flows for the years ended July
        29,
        2006 and July 30, 2005 have been restated.
 
 We
        have
        also audited, in accordance with the standards of the Public Company Accounting
        Oversight Board (United States), the Company's internal control over financial
        reporting as of July 28, 2007, based the criteria established in *Internal
        Control—Integrated Framework* issued
        by the Committee of Sponsoring Organizations of the Treadway Commission and
        our
        report dated October 8, 2007 expressed an unqualified opinion on the Company's
        internal control over financial reporting.
 
 /s/
        Deloitte & Touche LLP
  New
        York,
        New York
 October
        8, 2007


F-1


The
                  Dress Barn, Inc. and Subsidiaries**Consolidated
                  Balance Sheets**Amounts
                  in thousands, except share data
              
              **July
                  28, 2007**
              
              **July
                  29, 2006****ASSETS**
              
              
              
              **(As
                  restated****)****Current
                  Assets:**Cash
                  and cash equivalents
              
              $
              67,133
              
              $
              34,168Restricted
                  cash (see Note 1)
              
              
              -
              
              
              100Marketable
                  securities and investments (see Note 2)
              
              
              177,446
              
              
              118,745Merchandise
                  inventories
              
              
              197,143
              
              
              170,487Current
                  portion of deferred income tax assets (see Note 9)
              
              
              4,242
              
              
              2,296Prepaid
                  expenses and other current assets
              
              
              17,831
              
              
              19,404**Total
                  Current Assets**
              
              
              463,795
              
              
              345,200**Property
                  and Equipment:**Land
                  and buildings
              
              
              59,246
              
              
              58,730Leasehold
                  improvements
              
              
              157,301
              
              
              143,240Fixtures
                  and equipment
              
              
              217,441
              
              
              211,083Computer
                  software
              
              
              51,215
              
              
              39,763485,203
              
              
              452,816Less
                  accumulated depreciation and amortization
              
              
              228,749
              
              
              214,751Property
                  and equipment, net
              
              
              256,454
              
              
              238,065**Other
                  Intangible Assets, net (see Note 3)**
              
              
              108,932
              
              
              110,199**Goodwill
                  (see Note 3)**
              
              
              130,656
              
              
              132,566**Other
                  Assets**
              
              
              21,488
              
              
              16,667**TOTAL
                  ASSETS**
              
              $
              981,325
              
              $
              842,697


See
        notes
        to consolidated financial statements
 
 (continued)


F-2




The
                Dress Barn, Inc. and Subsidiaries**Consolidated
                Balance Sheets**Amounts
                in thousands, except share data
            
            **July
                28, 2007**
            
            **July
                29, 2006****(As
                restated****)****LIABILITIES
                AND SHAREHOLDERS' EQUITY****Current
                Liabilities:**Accounts
                payable
            
            $
            133,802
            
            $
            121,198Accrued
                salaries, wages and related expenses
            
            
            30,062
            
            
            25,704Other
                accrued expenses
            
            
            60,009
            
            
            38,557Customer
                credits
            
            
            15,141
            
            
            16,260Income
                taxes payable
            
            
            4,238
            
            
            11,453Current
                portion of long-term debt (see Note 5)
            
            
            1,211
            
            
            1,148Convertible
                Senior Notes (see Note 5)
            
            
            115,000
            
            
            115,000**Total
                Current Liabilities**
            
            
            359,463
            
            
            329,320Long-term
                debt (see Note 5)
            
            
            28,540
            
            
            29,751Deferred
                rent and other long-term liabilities
            
            
            79,218
            
            
            68,565Deferred
                income tax liabilities (see Note 9)
            
            
            4,703
            
            
            5,914**Total
                Liabilities**
            
            
            471,924
            
            
            433,550**Commitments
                and Contingencies (see Note 10)****Shareholders'
                Equity:**Preferred
                stock, par value $0.05 per share:Authorized-
                100,000 shares, Issued and Outstanding- none
            
            
            -
            
            
            -Common
                stock, par value $0.05 per share: Authorized- 75,000,000
                sharesIssued-
                62,303,794 and 61,715,588 shares, respectively
              Outstanding-
                61,693,794 and 61,715,588 shares, respectively
            
            
            3,115
            
            
            3,086Additional
                paid-in capital
            
            
            106,604
            
            
            87,673Retained
                earnings
            
            
            411,492
            
            
            318,380Treasury
                stock (common stock at cost, 610,000 shares)
            
            
            (11,849
            )
            
            -Accumulated
                other comprehensive income
            
            
            39
            
            
            8**Total
                Shareholders’ Equity**
            
            
            509,401
            
            
            409,147**TOTAL
                LIABILITIES AND SHAREHOLDERS’ EQUITY**
            
            $
            981,325
            
            $
            842,697See
                notes to consolidated financial statements


F-3




The
                  Dress Barn, Inc. and SubsidiariesConsolidated
                  Statements of EarningsAmounts
                  in thousands, except per share data**Fiscal
                  Year Ended****July
                  28,**
                **2007**
              
              **July
                  29,**
                **2006**
              
              **July
                  30,**
                **2005**Net
                  sales
              
              $
              1,426,607
              
              $
              1,300,277
              
              $
              1,000,264Cost
                    of sales, including occupancy and buying costs
                  (excluding
                    depreciation which is shown separately below)
              
              
              842,192
              
              
              773,631
              
              
              621,656Selling,
                  general and administrative expenses
              
              
              383,652
              
              
              353,031
              
              
              286,751Depreciation
                  and amortization
              
              
              45,791
              
              
              41,679
              
              
              34,457Litigation
                  (see Note 4)
              
              
              -
              
              
              -
              
              
              (35,329
              )Operating
                  income
              
              
              154,972
              
              
              131,936
              
              
              92,729Interest
                  income
              
              
              7,051
              
              
              2,656
              
              
              1,735Interest
                  expense
              
              
              (4,883
              )
              
              (5,364
              )
              
              (10,230
              )Other
                  income
              
              
              1,382
              
              
              1,526
              
              
              1,526Earnings
                          before provision for income taxes
              
              
              158,522
              
              
              130,754
              
              
              85,760Provision
                  for income taxes
              
              
              57,340
              
              
              51,800
              
              
              33,200**Net
                  earnings**
              
              $
              101,182
              
              $
              78,954
              
              $
              52,560Earnings
                  per share:Basic
              
              $
              1.63
              
              $
              1.29
              
              $
              0.88Diluted
              
              $
              1.45
              
              $
              1.15
              
              $
              0.86Weighted
                  average shares outstanding:Basic
              
              
              62,020
              
              
              61,216
              
              
              59,570Diluted
              
              
              70,022
              
              
              68,728
              
              
              61,158See
                  notes to consolidated financial statements




F-4




The
                  Dress Barn, Inc. and Subsidiaries**Consolidated
                  Statements of Shareholders’ Equity and Comprehensive
                  Income**(Amounts
                  and shares in thousands)**Common
                  Stock**
              
              
              
              
              
              
              
              **Accumulated****Shares**
              
              **Amount**
              
              **Additional**
                **Paid-In**
                **Capital**
              
              **Retained**
                **Earnings**
              
              **Treasury**
                **Stock**
              
              **Other**
                **Comprehensive**
                **Income
                  (Loss)**
              
              **Deferred
                  Compensation**
              
              **Total
                  Shareholders’ Equity****Balance,
                  July 31, 2004**
              
              
              59,238
              
              $
              2,964
              
              $
              62,072
              
              $
              188,757
              
              $
              (313
              )
              $
              (522
              )
              $
              -
              
              $
              252,958Net
                  earnings
              
              
              
              
              
              
              
              
              
              
              
              52,560
              
              
              
              
              
              
              
              
              
              
              
              52,560Reversal
                  of unrealized loss on marketable securities
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              522
              
              
              
              
              
              522Total
                  comprehensive income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              53,082Issuance
                  of restricted stock
              
              
              154
              
              
              8
              
              
              1,391
              
              
              
              
              
              
              
              
              
              
              
              (1,399
              )
              
              -Amortization
                  of deferred compensation
                expense
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              398
              
              
              398Tax
                  benefit from exercise of stock options
              
              
              
              
              
              
              
              
              2,258
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,258Employee
                  Stock Purchase Plan activity
              
              
              12
              
              
              
              
              
              136
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              136Shares
                  issued pursuant to exercise of stock options
              
              
              1,207
              
              
              61
              
              
              5,819
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5,880Purchase
                  of treasury stock
              
              
              (200
              )
              
              
              
              
              
              
              
              
              
              
              (1,584
              )
              
              
              
              
              
              
              
              (1,584
              )Retirement
                  of treasury stock
              
              
              
              
              
              (12
              )
              
              6
              
              
              (1,891
              )
              
              1,897
              
              
              
              
              
              
              
              
              -**Balance,
                  July 30, 2005**
              
              
              60,411
              
              
              3,021
              
              
              71,682
              
              
              239,426
              
              
              -
              
              
              -
              
              
              (1,001
              )
              
              313,128Net
                  earnings
              
              
              
              
              
              
              
              
              
              
              
              78,954
              
              
              
              
              
              
              
              
              
              
              
              78,954Unrealized
                  gain on marketable securities
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              8
              
              
              
              
              
              8Total
                  comprehensive income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              78,962Issuance
                  of restricted stock
              
              
              24
              
              
              1
              
              
              (1
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              -Restricted
                  stock compensation expense
              
              
              
              
              
              
              
              
              641
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              641Tax
                  benefit from exercise of stock options
              
              
              
              
              
              
              
              
              5,526
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5,526Employee
                  Stock Purchase Plan activity
              
              
              15
              
              
              
              
              
              285
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              285Shares
                  issued pursuant to exercise of stock options
              
              
              1,266
              
              
              64
              
              
              6,121
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              6,185Share
                  based compensation - stock options
              
              
              
              
              
              
              
              
              4,420
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              4,420Reclass
                  of deferred compensation upon adoption of SFAS No. 123R,*Share
                  Based Payment*
              
              
              
              
              
              
              
              
              (1,001
              )
              
              
              
              
              
              
              
              
              
              
              1,001
              
              
              -**Balance,
                  July 29, 2006**
              
              
              61,716
              
              
              3,086
              
              
              87,673
              
              
              318,380
              
              
              -
              
              
              8
              
              
              -
              
              
              409,147Net
                  earnings
              
              
              
              
              
              
              
              
              
              
              
              101,182
              
              
              
              
              
              
              
              
              
              
              
              101,182Unrealized
                  gain on marketable securities
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              31
              
              
              
              
              
              31Total
                  comprehensive income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              101,213Issuance
                  of restricted stock
              
              
              39
              
              
              2
              
              
              (2
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              -Restricted
                  stock compensation expense
              
              
              (5
              )
              
              
              
              
              1,091
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,091Tax
                  benefit from exercise of stock options
              
              
              
              
              
              
              
              
              5,863
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5,863Employee
                  Stock Purchase Plan activity
              
              
              15
              
              
              1
              
              
              298
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              299Shares
                  issued pursuant to exercise of stock options
              
              
              939
              
              
              46
              
              
              6,465
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              6,511Share
                  based compensation - stock options
              
              
              
              
              
              
              
              
              5,216
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5,216Purchase
                  of treasury stock
              
              
              (1,010
              )
              
              
              
              
              
              
              
              
              
              
              (19,939
              )
              
              
              
              
              
              
              
              (19,939
              )Retirement
                  of treasury stock
              
              
              
              
              
              (20
              )
              
              
              
              
              (8,070
              )
              
              8,090
              
              
              
              
              
              
              
              
              -**Balance,
                  July 28, 2007**
              
              
              61,694
              
              $
              3,115
              
              $
              106,604
              
              $
              411,492
              
              $
              (11,849
              )
              $
              39
              
              $
              -
              
              $
              509,401




See
        notes
        to consolidated financial statements




F-5




The
                  Dress Barn, Inc. and Subsidiaries**Consolidated
                  Statements of Cash Flows**Amounts
                  in thousands**Fiscal
                  Year Ended****July
                  28,**
                **2007**
              
              **July
                  29,**
                **2006**
              
              **July
                  30,**
                **2005****(As
                  restated)**
              
              **(As
                  restated)****Operating
                  Activities:**Net
                  earnings
              
              $
              101,182
              
              $
              78,954
              
              $
              52,560Adjustments
                  to reconcile net earnings to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              
              
              45,791
              
              
              41,679
              
              
              34,457Impairments
                  and asset disposals
              
              
              2,363
              
              
              3,794
              
              
              6,136Deferred
                  taxes
              
              
              (1,533
              )
              
              (5,705
              )
              
              26,787Deferred
                  rent and other occupancy costs
              
              
              (4,520
              )
              
              5,092
              
              
              1,268Share
                  based compensation
              
              
              5,216
              
              
              4,449
              
              
              -Tax
                  benefit on exercise of unqualified stock options
              
              
              5,863
              
              
              5,526
              
              
              2,258Excess
                  tax benefits from stock-based compensation
              
              
              (5,721
              )
              
              (1,882
              )
              
              -Amortization
                  of debt issuance cost
              
              
              372
              
              
              808
              
              
              3,920Amortization
                  of bond premium cost
              
              
              108
              
              
              59
              
              
              -Increase
                  in cash surrender value of life insurance
              
              
              (441
              )
              
              (818
              )
              
              (522
              )Restricted
                  stock compensation expense
              
              
              1,091
              
              
              641
              
              
              398Realized
                  loss on sales of securities
              
              
              215
              
              
              3
              
              
              579Gift
                  card breakage
              
              
              (3,724
              )
              
              -
              
              
              -Other
              
              
              (354
              )
              
              -
              
              
              -Changes
                  in assets and liabilities, net of acquisition:(Increase)
                  in merchandise inventories
              
              
              (26,656
              )
              
              (2,844
              )
              
              (17,256
              )Decrease/(increase)
                  in prepaid expenses and other current assets
              
              
              2,171
              
              
              (6,469
              )
              
              3,780Decrease
                  / (increase) in other assets
              
              
              450
              
              
              2,479
              
              
              (650
              )Increase
                  in accounts payable
              
              
              12,604
              
              
              13,496
              
              
              22,874Increase
                  in accrued salaries, wages and related expenses
              
              
              4,358
              
              
              3,856
              
              
              5,305(Decrease)
                  in litigation accrual
              
              
              -
              
              
              -
              
              
              (36,128
              )Increase
                  in other accrued expenses
              
              
              7,313
              
              
              1,800
              
              
              2,428Increase
                  / (decrease) in customer credits
              
              
              2,605
              
              
              3,411
              
              
              (938
              )(Decrease)
                  / increase in income taxes payable
              
              
              (8,839
              )
              
              9,839
              
              
              (6,553
              )Increase
                  in other long-term liabilities
              
              
              15,318
              
              
              5,918
              
              
              4,880Total
                  adjustments
              
              
              54,050
              
              
              85,132
              
              
              53,023Net
                  cash provided by operating activities
              
              
              155,232
              
              
              164,086
              
              
              105,583




See notes to consolidated financial statements




(continued)




F-6




The
                  Dress Barn, Inc. and Subsidiaries**Consolidated
                  Statements of Cash Flows**Amounts
                  in thousands**Fiscal
                  Year Ended****July
                  28,**
                **2007**
              
              **July
                  29,**
                **2006**
              
              **July
                  30,**
                **2005****(As
                  restated)**
              
              **(As
                  restated)****Investing
                  Activities:**Acquisition
                  of Maurices Incorporated, net of $982 cash acquired
              
              $
              -
              
              $
              -
              
              $
              (328,305
              )Return
                  of restricted cash
              
              
              100
              
              
              -
              
              
              38,561Purchases
                  of property and equipment
              
              
              (62,986
              )
              
              (48,276
              )
              
              (31,381
              )Sales
                  and maturities of marketable securities and investments
              
              
              344,097
              
              
              460,250
              
              
              652,629Purchases
                  of marketable securities and investments
              
              
              (403,090
              )
              
              (579,026
              )
              
              (530,071
              )Investment
                  in life insurance policies
              
              
              (3,279
              )
              
              (2,200
              )
              
              -Purchases
                  of long-term investments
              
              
              (2,312
              )
              
              (343
              )
              
              -Reimbursement
                  related to acquisition of Maurices Incorporated
              
              
              1,910
              
              
              -
              
              
              -Net
                  cash used in investing activities
              
              
              (125,560
              )
              
              (169,595
              )
              
              (198,567
              )**Financing
                  Activities:**Proceeds
                  from issuance of long-term debt
              
              
              -
              
              
              -
              
              
              215,000Payment
                  of long-term debt
              
              
              (1,148
              )
              
              (11,090
              )
              
              (91,033
              )Refund
                  of / (payment) for debt issuance cost
              
              
              -
              
              
              10
              
              
              (8,122
              )Purchase
                  of treasury stock
              
              
              (8,090
              )
              
              -
              
              
              (1,584
              )Proceeds
                  from Employee Stock Purchase Plan
              
              
              299
              
              
              256
              
              
              136Excess
                  tax benefits from stock-based compensation
              
              
              5,721
              
              
              1,882
              
              
              -Proceeds
                  from stock options exercised
              
              
              6,511
              
              
              6,185
              
              
              5,880Net
                  cash provided by (used in) financing activities
              
              
              3,293
              
              
              (2,757
              )
              
              120,277Net
                  increase (decrease) in cash and cash equivalents
              
              
              32,965
              
              
              (8,266
              )
              
              27,293Cash
                  and cash equivalents- beginning of year
              
              
              34,168
              
              
              42,434
              
              
              15,141Cash
                  and cash equivalents- end of year
              
              $
              67,133
              
              $
              34,168
              
              $
              42,434Supplemental
                  Disclosure of Cash Flow Information:Cash
                  paid for income taxes
              
              $
              61,906
              
              $
              42,660
              
              $
              12,083Cash
                  paid for interest
              
              $
              4,494
              
              $
              4,892
              
              $
              5,700Capital
                  expenditures incurred but not yet paid
              
              $
              2,290
              
              $
              1,520
              
              $
              2,702Treasury
                  shares purchased not settled
              
              $
              11,849
              
              $
              -
              
              $
              -




See notes to consolidated financial statements




F-7




**The
        Dress Barn, Inc. and Subsidiaries** ****
 **Notes
        to Consolidated Financial Statements**
  **1.**  **Summary
        of Significant Accounting Policies**
 
 *Business*
 
 The
        Dress
        Barn, Inc. and its wholly-owned subsidiaries (the “Company,” “we,” “our,” or
        similar terms) operate a chain of women's apparel specialty stores. The stores
        operate 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 to the working woman at value prices. The **dressbarn** brands
        primarily attract female consumers in the mid 30’s to mid 50’s age range. The **maurices** stores
        are concentrated in small markets (having populations of approximately 25,000
        to
        100,000) in the United States and offer moderately priced, up-to-date fashions
        designed to appeal to **maurices** ’
target
        customers, the 17 to 34 year-old female. During third quarter of Fiscal 2007 **maurices** began
        transitioning out of the men’s product line in order to introduce female
        plus-sizes in the fourth quarter of Fiscal 2007.
 
 *Basis
        of financial statement presentation*
 
 Our
        accounting and reporting policies conform to the generally accepted accounting
        principles in the United States of America (US GAAP). All
        prior
        period common stock and share and per share amounts have been adjusted to
        reflect a two-for-one split of our common stock effective April 3,
        2006.
  *Principles
        of consolidation*
 
 The
        consolidated financial statements include the accounts of the Company and
        our
        subsidiaries. All intercompany balances and transactions are eliminated in
        consolidation. We report on a 52-53 week fiscal year ending on the last Saturday
        in July. Fiscal years 2007, 2006 and 2005 consisted of 52 weeks.
 
 Dunnigan
        Realty, LLC, our wholly-owned subsidiary, was formed in Fiscal 2003 to purchase,
        own and operate a distribution/office facility in Suffern, New York (the
        “Suffern facility”), of which the major portion is our corporate offices and **dressbarn’s** distribution center. Dunnigan Realty, LLC receives rental income and
        reimbursement for taxes and common area maintenance charges from us and two
        additional tenants that occupy the Suffern facility that are not affiliated
        with
        us. The rental income from the unaffiliated tenants is shown as “other income”
on our Consolidated Statements of Earnings. Intercompany rentals between
        us and
        Dunnigan Realty, LLC are eliminated in consolidation.
 
 *Revenue
        recognition*
 
 Revenues
        from retail sales, net of estimated returns, are recognized at the point
        of
        purchase upon delivery of the merchandise to the customer and exclude sales
        taxes. The **maurices** segment
        charges its customers a small fee to offset shipping costs to move product
        from
        store to store for special order transactions. Amounts related to shipping
        and
        handling, billed to customers as part of a sales transaction, are classified
        as
        revenue. We record a reserve for estimated product returns when sales are
        recorded based on historical return trends and is adjusted for known events,
        as
        applicable. The changes in the sales return reserve are summarized below:
 
 (amounts
                  in thousands)
              
              Fiscal
                  Year EndedJuly
                  28, 2007
              
              July
                  29, 2006
              
              July
                  30, 2005Balance
                  at beginning of period
              
              $
              1,550
              
              $
              1,351
              
              $
              743Additions
                  - charge to income
              
              
              6,760
              
              
              6,687
              
              
              7,842Adjustments
                  and/or deductions
              
              
              (6,739
              )
              
              (6,488
              )
              
              (7,234
              )Balance
                  at end of period
              
              $
              1,571
              
              $
              1,550
              
              $
              1,351
  Sales
        from purchases made with gift cards, gift certificates, and layaway sales
        are
        recorded when the customer takes possession of the merchandise. Gift cards,
        gift
        certificates and merchandise credits (collectively “gift cards”) do not have
        expiration dates We recognize income on unredeemed gift cards (“gift card
        breakage”) 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 Fiscal 2005. 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. As
        a
        result, in the fourth quarter of Fiscal 2007, we recognized $3.7 million
        of gift
        card breakage income related to unredeemed gift cards which included $2.6
        million for **dressbarn** and $1.1
        million for **maurices** .
  F-8
  *Cost
        of Sales, Including Certain Buying, Occupancy and Warehousing Expenses,
        excluding depreciation*
 
 Cost
        of
        sales consists of net merchandise costs, including design, sourcing, importing
        and inbound freight costs, as well as markdowns, shrinkage and promotional
        costs. Buying, occupancy and warehousing costs consist of compensation and
        travel expenses for our buyers and certain senior merchandising executives;
        rent
        related to our stores, corporate headquarters, distribution centers and other
        office space; freight from our distribution centers to the stores; and
        compensation and supplies for our distribution centers, including purchasing,
        receiving and inspection costs.
 
 *Selling,
        General and Administrative Expenses*
 
 Selling,
        general and administrative expenses consist of compensation and employee
        benefit
        expenses, other than for our design, sourcing and importing teams, our buyers
        and our distribution centers personnel. Such compensation and employee benefit
        expenses include salaries, incentives, share based compensation and related
        benefits associated with our stores and corporate headquarters, except as
        previously noted. Selling, general and administrative expenses also include
        advertising costs, supplies for our stores and home office, communication
        costs,
        travel and entertainment, leasing costs and services purchased.
 
 *Segments*
 
 Our
        reportable segments are the **dressbarn** brands,
        which are used in 617 Combo
        stores (a combination of **dressbarn** and **dressbarn**  **woman** stores),
        161 **dressbarn** stores,
        43 **dressbarn**  **woman** stores in 46
        states as of July 28, 2007 and the **maurices** brand,
        which is used in 607 stores in 42 states as of July 28, 2007. We completed
        the
        acquisition of Maurices Incorporated in January 2005.
  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.
        The **dressbarn** brands
        primarily attract female consumers in the mid 30’s to mid 50’s age range, while **maurices** ’
        fashions are designed to appeal to the 17 to 34 year-old-female. During the
        third quarter of Fiscal 2007 **maurices** began
        transitioning out of the men’s product line in order to introduce female
        plus-sizes in the fourth quarter of Fiscal 2007. Our **maurices** stores
        are concentrated in small markets in the United States, while our **dressbarn** and **dressbarn**  **woman** stores
        tend to be in larger population markets. Substantially
        all of **maurices’** management team prior to the acquisition continues to manage the daily
        operations of **maurices** . **maurices** also
        distributes goods to its stores through a separate distribution center. **maurices** also has
        separate financial reporting systems from **dressbarn** .
        We
        believe that **maurices** is
        currently a reportable segment due to management’s review of **maurices’** separately available operating results and other financial information to
        regularly assess its performance for decision-making purposes.
 
 *Cash
        and cash equivalents*
 
 We
        consider highly liquid investments with maturities of three months or less
        when
        purchased to be cash equivalents. These amounts are stated at cost, which
        approximates market value. We also consider receivables related to credit
        card
        purchases to be equivalent to cash. The majority of our money market funds
        at
        July 28, 2007 were maintained with one financial institution. We
        maintain our cash deposits and cash equivalents with well-known and stable
        financial institutions. However, we have significant amounts of cash and
        cash
        equivalents at these financial institutions that are in excess of federally
        insured limits. This represents a concentration of credit risk. We have not
        experienced any losses on our deposits of cash and cash equivalents to
        date.
  *Restricted
        cash*
 
 At
        July
        29, 2006, restricted cash consisted of $100 thousand held in escrow as required
        as part of a pending lawsuit. During the second quarter of Fiscal 2007, the
        pending lawsuit was resolved and the cash was released from escrow.
 
 *Marketable
        securities and investments*
 
 We
        have
        categorized our marketable securities as available for sale, stated at market
        value. The unrealized holding gains and losses are included in other
        comprehensive income, a component of shareholders’ equity, until realized. The
        amortized cost is adjusted for amortization of premiums and discounts to
        maturity, with the net amortization included in interest income.
 
 *Merchandise
        inventories*
 
 We
        value
        our merchandise inventories at the lower of cost, on a First In First Out
        (FIFO)
        basis, or market, as determined by the retail inventory method. We include
        in
        cost of sales, net merchandise costs, including design, sourcing, importing
        and
        inbound freight costs, as well as markdowns, shrinkage and promotional costs.
        Buying, occupancy and warehousing costs consist of compensation and travel
        expenses for our buyers and certain senior merchandising executives; rent
        related to our stores, corporate headquarters, distribution centers and other
        office space; freight from our distribution centers to the stores; and
        compensation and supplies for our distribution centers, including purchasing,
        receiving and inspection costs.
  F-9
  *Property
        and equipment*
 
 Property
        and equipment are carried at cost less accumulated depreciation. Depreciation
        is
        provided on the straight-line method over the estimated useful lives. The
        depreciable lives for buildings is 25 years, furniture and fixtures and
        machinery and equipment is 10 years, data processing equipment is 7 years,
        automobiles are 5 years and software is approximately 5 years. Leasehold
        improvements are amortized over the shorter of their estimated useful lives
        or
        the related lease life, generally 10 years. For leases with renewal periods
        at our option, we generally use the original lease term, excluding renewal
        option periods to determine estimated useful lives; if failure to exercise
        a
        renewal option imposes an economic penalty to us, management determines at
        the
        inception of the lease that renewal is reasonably assured and includes the
        renewal option period in the determination of appropriate estimated useful
        lives. The costs of repairs and maintenance are expensed when incurred, while
        expenditures for refurbishments and improvements that significantly add to
        the
        productive capacity or extend the useful life of an asset are capitalized.
 
 *Impairment
        of long-lived assets*
 
 We
        primarily invest in property and equipment in connection with the opening
        and
        remodeling of stores. When facts and circumstances indicate that the carrying
        values of such long-lived assets may be impaired, an evaluation of
        recoverability is performed by comparing the carrying values of the assets
        to
        projected future cash flows, in addition to other quantitative and qualitative
        analyses. Upon indication that the carrying values of such assets may not
        be
        recoverable, we recognize an impairment loss as a charge against current
        operations. Property and equipment assets are grouped at the lowest level
        for
        which there is identifiable cash flows when assessing impairment, which is
        the
        individual store level. Judgments
        made by us related to the expected useful lives of long-lived assets and
        the
        ability to realize undiscounted cash flows in excess of the carrying amounts
        of
        such assets are affected by factors such as the ongoing maintenance and
        improvements of the assets, changes in economic conditions and changes in
        operating performance. In
        addition, we regularly evaluate our computer-related and other assets for
        recoverability. Based
        on
        the review of certain under performing stores, we recorded impairment charges
        and store closings that are included in selling, general and administrative
        expenses of $1.7 million in Fiscal 2007 ( **dressbarn** $1.1
        million, **maurices** $0.6
        million), $3.2 million in Fiscal 2006 ( **dressbarn** $2.1
        million, **maurices** $1.1
        million), and $5.7 million in Fiscal 2005 ( **dressbarn** $5.0
        million, **maurices** $0.7
        million). These impairment losses reflect the amount of book value over
        estimated fair market value of store related assets.
 
 *Costs
        of computer software*
 
 We
        capitalize certain costs associated with computer software developed or obtained
        for internal use in accordance with the provisions of Statement of Position
        No
        98-1, *Accounting
        for the Costs of Computer Software Developed or Obtained for Internal
        Use* (SOP
        98-1), issued by the American Institute of Certified Public Accountants (AICPA).
        We capitalize those costs from the acquisition of external materials and
        services associated with developing or obtaining internal use computer software.
        We capitalize certain payroll costs for employees that are directly associated
        with internal use computer software projects once specific criteria of SOP
        98-1
        are met. We expense those costs that are associated with preliminary stage
        activities, training, maintenance, and all other post-implementation stage
        activities as they are incurred. We amortize all costs capitalized in connection
        with internal use computer software projects on a straight-line basis over
        the
        useful life of the asset, beginning when the software is ready for its intended
        use.
 
 *Insurance
        reserves*
 
 We
        use a
        combination of insurance and self-insurance mechanisms to provide for the
        potential liabilities associated with workers’ compensation and employee
        healthcare benefit claims. Liabilities associated with the risks that are
        retained by us are estimated, in part, by considering historical claims
        experience, demographic factors, severity factors and other actuarial
        assumptions. Such liabilities are capped through the use of stop loss contracts
        with insurance companies. The estimated accruals for these liabilities could
        be
        significantly affected if future occurrences and claims differ from these
        assumptions and historical trends. As of July 28, 2007 and July 29, 2006
        these reserves were $8.4 million and $7.8 million, respectively.
 
 *Income
        taxes*
 
 We
        account for income taxes in accordance with SFAS No. 109, ** *Accounting
        for Income Taxes*  (“SFAS
        No. 109”), which requires the use of the asset and liability method. Deferred
        tax assets and liabilities are recognized based on the differences between
        the
        financial statement carrying value of existing assets and liabilities and
        their
        respective tax bases. We
        establish valuation allowances against deferred tax assets when it is more
        likely than not that the realization of those deferred tax assets will not
        occur.
  Under
        the
        asset and liability method, deferred tax assets and liabilities are recognized,
        and income or expense is recorded, for the estimated future tax consequences
        attributable to differences between the financial statement carrying amounts
        of
        existing assets and liabilities and their respective tax bases. We file a
        consolidated Federal income tax return.
  F-10
  *Goodwill
        and other intangible assets*
 
 Goodwill
        represents the excess of the purchase price over the fair values of net
        identifiable assets acquired. In accordance with SFAS No. 142, *Goodwill
        and Other Intangible Assets* ,
        we do
        not amortize goodwill or other intangible assets with indefinite lives but,
        rather, evaluate goodwill and other intangible assets with indefinite lives
        annually or whenever events or changes in circumstances indicate that the
        carrying amount may not be recoverable. The conditions that would trigger
        an
        impairment of goodwill or intangible assets with indefinite lives include
        a
        significant, sustained negative trend in **maurices** ’
        operating results or cash flows, a decrease in demand for **maurices** ’
        products, a change in the competitive environment or other industry and economic
        factors. During the fourth quarter, on or about June 30 th ,
        we did
        perform an assessment for impairment of our goodwill and our intangible assets
        with indefinite lives. Based on the estimated fair market values (calculated
        using discounted cash flows, comparable transactions, and comparable public
        companies) of the goodwill and our intangible assets with indefinite lives,
        we
        determined that no impairment exists.
 
 *Store
        preopening costs*
 
 Non-capital
        expenditures, such as advertising and payroll costs incurred prior to the
        opening of a new store are charged to expense in the period they are
        incurred.
 
 *Marketing
        and advertising costs*
 
 Marketing
        and advertising costs are included in selling, general and administrative
        expenses and are expensed the
        first
        time the advertising campaign takes place .
        Marketing and advertising expenses were $21.3 million for Fiscal 2007, $17.3
        million for Fiscal 2006, and $15.5 million for Fiscal 2005.
 
 *Operating
        leases*
 
 We
        lease
        retail stores under operating leases. Most lease agreements contain construction
        allowances, and rent escalations. For purposes of recognizing incentives
        and
        minimum rental expenses on a straight-line basis over the terms of the leases,
        we use the date of initial possession to begin amortization, which is generally
        when we enter the space and begin to make improvements in preparation of
        intended use.
 
 For
        construction allowances, we record a deferred rent liability in “Other accrued
        expenses” and “Deferred rent and other” on the consolidated balance sheets and
        amortize the deferred rent over the term of the respective lease as reductions
        to “Cost of sales including occupancy and buying costs” on the consolidated
        statements of earnings.
 
 For
        scheduled rent escalation clauses during the lease terms or for rental payments
        commencing at a date other than the date of initial occupancy, we record
        minimum
        rental expenses on a straight-line basis over the terms of the leases.
 
 Certain
        leases provide for contingent rents, which are determined as a percentage
        of
        gross sales in excess of specified levels. We record a contingent rent liability
        in “Other accrued expenses” on the consolidated balance sheets and the
        corresponding rent expense when specified levels have been achieved or when
        management determines that achieving the specified levels during the fiscal
        year
        is probable.
 
 *Use
        of estimates*
 
 The
        preparation of the financial statements in conformity with US GAAP requires
        us
        to make estimates and assumptions that affect the amounts reported in the
        consolidated financial statements and accompanying notes. The more significant
        items subject to such estimates and assumptions include fair value of our
        equity
        securities, carrying amount of property and equipment, goodwill, other
        intangible assets, obligations related to employee benefits, inventory
        valuation, insurance reserves, and accounting for income taxes. Actual results
        could differ from those estimates.
 
 *Comprehensive
        income*
 
 Comprehensive
        income is calculated in accordance with SFAS No. 130, *Reporting
        Comprehensive Income* ,
        and
        includes our net earnings and unrealized gains and losses on available-for-sale
        marketable securities. Cumulative unrealized gains and losses on
        available-for-sale marketable securities are reflected as accumulated other
        comprehensive income (loss) in shareholders’ equity.
  F-11
  *Share-based
        compensation*
 
 Effective
        July 31, 2005, we began recording compensation expense associated with
        stock options and other forms of equity compensation in accordance with SFAS
        No. 123R, *Share-Based
        Payment* ,
        (“SFAS
        No. 123R”) as interpreted by SEC Staff Accounting Bulletin No. 107, *Valuation
        of share-based payment arrangements for public companies* ,
        (SAB
        107). Prior to July 31, 2005, we had accounted for stock options according
        to the provisions of Accounting Principles Board (“APB”) Opinion No. 25, *Accounting
        for Stock Issued to Employees* ,
        and
        related interpretations, and therefore no related compensation expense was
        recorded for awards granted with no intrinsic value. We adopted the modified
        prospective transition method provided under SFAS No. 123R, and, consequently,
        have not retroactively adjusted results from prior periods. Under this
        transition method, compensation cost associated with stock options recognized
        in
        the fiscal year ended July 29, 2006 (“Fiscal 2006”) includes: 1) amortization
        related to the remaining unvested portion of all stock option awards granted
        prior to July 31, 2005, based on the grant date fair value estimated in
        accordance with the original provisions of SFAS No. 123; and 2)
        amortization related to all stock option awards granted subsequent to
        July 31, 2005, based on the grant date fair value estimated in accordance
        with the provisions of SFAS No. 123R.
 
 During
        the fifty-two weeks ended July 28, 2007 and July 29, 2006 we recognized
        approximately $5.2 million and $4.4 million, respectively, in share-based
        compensation expense related to stock options. During the fifty-two weeks
        ended
        July 28, 2007 and July 29, 2006 we recognized approximately $1.1 million
        and
        $0.6 million, respectively, in share-based compensation expense related to
        restricted stock. No compensation cost was recognized prior to July 31, 2005,
        other than amortization of restricted stock grants.  Had compensation cost
        for our share-based compensation plans been determined consistent with SFAS
        No.
        123, *Accounting
        for Stock-Based Compensation* ,
        our net
        income and earnings per share would have been reduced to the following pro
        forma
        amounts :
 
 **Fiscal
                  Year Ended**(Amounts
                  in thousands, except per share data)
              
              **July
                  30, 2005**Net
                  earnings as reported
              
              $
              52,560Add:
                  share-based employee compensation expense
                included
                  in reported net income, net of taxes
              
              
              244Deduct:
                  Total stock-based employeecompensation
                  expense determinedunder
                  fair value based methodfor
                  all awards net of related tax effects
              
              
              (1,681
              )**Pro
                  forma net earnings**
              
              $
              51,123Earnings
                  per shareBasic
                  - as reported
              
              $
              0.88Basic
                  - pro forma
              
              $
              0.86Diluted
                  - as reported
              
              $
              0.86Diluted
                  - pro forma
              
              $
              0.84
 
 The
        fair
        values of the options granted under our fixed stock option plans were estimated
        on the date of grant using the Black-Scholes option pricing model with the
        following assumptions:
  **Fiscal
                    Year Ended****July
                    28,**
                  **2007**
                
                **July
                    29,**
                  **2006**
                
                **July
                    30,**
                  **2005**Weighted
                    average risk-free interest rate
                
                
                4.5
                %
                
                4.2
                %
                
                3.6
                %Weighted
                    average expected life (years)
                
                
                4.7
                
                
                4.9
                
                
                5.0Expected
                    volatility of the market price of our common stock
                
                
                39.5
                %
                
                42.2
                %
                
                45.1
                %Expected
                    dividend yield
                
                
                0
                %
                
                0
                %
                
                0
                %
  The
        Black-Scholes option pricing model was developed for use in estimating the
        fair
        value of traded options, which have no vesting restrictions and are fully
        transferable. The expected life of options represents the period of time
        the
        options are expected to be outstanding and is based on historical trends. We
        compiled historical data on an employee-by-employee basis from the grant
        date
        through the settlement date. The results showed that there were four distinct
        populations of optionees, the Executives & Officers Group, the Outside
        Directors group, the Store Managers group and the All Others Group. Thus,
        we
        will use different expected term assumptions for these four groups in estimating
        fair value, as this approach is more precise and yielded a more accurate
        estimate of fair value than using one term assumption for all groups. The
        risk-free rate is based on the yield of a US Treasury strip rate with a maturity
        date corresponding to the expected term of the option granted. The expected
        volatility assumption is based on the historical volatility of our stock
        over a
        term equal to the expected term of the option granted. All option
        valuation models require input of highly subjective assumptions. Because
        our
        employee stock options have characteristics significantly different from
        those
        of traded options, and because changes in subjective input assumptions can
        materially affect the fair value estimate, the actual value realized at the
        time
        the options are exercised may differ from the estimated values computed above.
        SFAS No. 123R also requires forfeitures to be estimated at the time of grant
        and
        revised, if necessary, in subsequent periods if actual forfeitures differ
        from
        those estimates.
  F-12
 *Financial
        instruments*
 
 Concentration
        of Credit Risk - Financial instruments, which potentially subject us to
        concentrations of credit risk, are principally bank deposits and short-term
        investments. Cash and cash equivalents are deposited with high credit quality
        financial institutions. Short-term investments principally consist of “triple A”
or “double A” rated instruments.
 
 Fair
        Value of Financial Instruments - At July 28, 2007 and July 29, 2006, our
        financial instruments consist primarily of cash, cash equivalents, short-term
        investments, and accounts payable. We believe that the carrying value of
        these
        assets and liabilities are representative of their respective fair values.
        The
        Convertible Senior Notes are
        carried on the cost basis, the market value on July 27, 2007 was $215.3 million
        as valued on PORTAL (Private Offering Resale and Trading through
        Automated Linkage).
  *Treasury
        (reacquired) shares*
 
 Shares
        repurchased are retired and treated as authorized but unissued shares, with
        the
        cost of the reacquired shares recorded in retained earnings and the par value
        recorded in common stock. As of July 28, 2007 we had purchased 610,000 shares
        at
        a cost of $11.8 million for which the cash had not yet been expended. This
        amount was included in other accrued expenses as of July 28, 2007.
 
 *Recent
        accounting pronouncements*
 
 In
        June
        2006, the Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task
        Force reached a consensus on Issue No. 06-3, *How
        Taxes Collected from Customers and Remitted to Governmental Authorities Should
        be Presented in the Income Statement (That Is, Gross versus Net
        Presentation)* (“EITF
        06-3”). EITF 06-3 includes sales, use, value-added and some excise taxes that
        are assessed by a governmental authority on specific revenue-producing
        transactions between a seller and a customer. EITF 06-3 requires disclosure
        of
        the method of accounting for the applicable assessed taxes and the amount
        of
        assessed taxes included in revenues if such taxes are accounted for under
        the
        gross method. EITF 06-3 is effective for interim and annual periods beginning
        after December 15, 2006. The adoption of EITF 06-3 did not have a material
        impact on our consolidated financial position, results of operations or cash
        flows. Our r evenues
        from retail sales exclude sales taxes.
 
 In
        June
        2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), *Accounting
        for Uncertainty in Income Taxes — an interpretation of FASB Statement No.
        109* ,
        which
        clarifies the accounting for uncertainty in income taxes recognized in financial
        statements in accordance with FASB Statement No. 109, Accounting for Income
        Taxes. FIN 48 provides guidance on the financial statement recognition and
        measurement of a tax position taken or expected to be taken in a tax return.
        FIN
        48 requires that companies recognize in their consolidated financial statements
        the impact of a tax position that is more likely than not to be sustained
        upon
        examination based on the technical merits of the position. The first step
        is to
        evaluate the tax position for recognition by determining if the weight of
        available evidence indicates it is more likely than not that the position
        will
        be sustained on audit, including resolution of related appeals or litigation
        processes, if any. The second step is to measure the tax benefit as the largest
        amount that is more than 50% likely of being realized upon ultimate settlement.
        FIN 48 also provides guidance on derecognition, classification, interest
        and
        penalties, accounting in interim periods, disclosures, and transition. FIN
        48 is
        effective for fiscal years beginning after December 15, 2006 (our Fiscal
        2008). The
        adoption of FIN 48 is not expected to have a material effect on our consolidated
        financial position or results of operations.
 
 In
        September 2006, the FASB issued SFAS No. 157, *Fair
        Value Measurements* ,
        which
        defined fair value, establishes a framework for measuring fair value under
        GAAP,
        and expands disclosures about fair value measurements. SFAS No. 157 applies
        to
        other accounting pronouncements that require or permit fair value measurement.
        SFAS No. 157 is effective for financial statements issued for fiscal years
        beginning after November 15, 2007 (our Fiscal 2009), and for interim periods
        within those fiscal years. We have not completed our evaluation of the potential
        impact, if any, of the adoption of SFAS No. 157 on our consolidated financial
        position, results of operations and cash flows.
 
 In
        September 2006, the Securities and Exchange Commission (SEC) issued Staff
        Accounting Bulletin (SAB) No. 108, *Considering
        the Effects of Prior Year Misstatements When Quantifying Misstatements in
        Current Year Financial Statements* ,
        which
        provides interpretive guidance on the consideration of the effects of prior
        year
        misstatements in quantifying current year misstatements for the purpose of
        materiality assessment. SAB No. 108 is effective for fiscal years ending
        after
        November 15, 2006 (our Fiscal 2007). The cumulative effect, if any, of applying
        the provisions of SAB No. 108 is reported as an adjustment to beginning-of-year
        retained earnings. We adopted SAB 108 during fourth quarter of Fiscal 2007. The
        adoption of SAB 108 did not have an impact on our consolidated financial
        position, results of operations or cash flows.
 
 F-13
 
 In
        February 2007, the FASB issued SFAS No. 159, *The
        Fair Value Option for Financial Assets and Financial Liabilities - Including
        an
        Amendment of FASB Statement No. 115* ,
        which
        provides companies with an option to measure, at specified election dates,
        many
        financial instruments and certain other items at fair value that are not
        currently measured at fair value. A company will report unrealized gains
        and
        losses on items for which the fair value option has been elected in earnings
        at
        each subsequent reporting date. This Statement also establishes presentation
        and
        disclosure requirements designed to facilitate comparisons between entities
        that
        choose different measurement attributes for similar types of assets and
        liabilities. SFAS 159 is effective as of the beginning of an entity’s first
        fiscal year that begins after November 15, 2007 (our Fiscal 2009). We have
        not
        completed our evaluation of the potential impact, if any, of the adoption
        of
        SFAS No. 159 on our consolidated financial position, results of operations
        and
        cash flows.
  **2.
        Marketable Securities and Investments**
 
 We
        purchase short-term investments and marketable securities that have been
        designated as “available-for-sale” as required by SFAS No. 115, *Accounting
        for Certain Investments in Debt and Equity Securities* .
        Available-for-sale securities are carried at fair value with the unrealized
        gains and losses reported in shareholders’ equity under the caption “Accumulated
        other comprehensive income.” The cost of securities sold is based on the
        specific identification method.
 
 The
        amortized cost and estimated fair value based on published closing prices
        of
        securities at July 28, 2007 and July 29, 2006, are shown below.
 July
                    28, 2007
                
                July
                    29, 2006(Amounts
                    in thousands)
                
                Estimated
                  Fair
                    Value
                
                Amortized
                  Cost
                
                Estimated
                  Fair
                    Value
                
                Amortized
                  CostMunicipal
                    bonds
                
                $
                69,871
                
                $
                69,832
                
                $
                29,465
                
                $
                29,457Tax-exempt
                    auction rate securities
                
                
                107,575
                
                
                107,575
                
                
                89,280
                
                
                89,280Total
                
                $
                177,446
                
                $
                177,407
                
                $
                118,745
                
                $
                118,737
 
 *Auction
        Rate Securities*
 
 Auction
        rate securities have been classified as short-term marketable securities.
        Auction rate securities are variable rate bonds tied to short-term interest
        rates with maturities on the face of the securities in excess of 90 days.
        Auction rate securities have interest rate resets through a modified Dutch
        auction, at predetermined short-term intervals, usually every 7, 28 or 35
        days.
        They trade at par and are callable at par on any interest payment date at
        the
        option of the issuer. Interest paid during a given period is based upon the
        interest rate determined during the prior auction. Although these securities
        are
        issued and rated as long-term bonds, they are priced and traded as short-term
        instruments because of the liquidity provided through the interest rate reset.
        All of our auction rate securities holdings are tax-exempt.
 
 The
        cost
        and estimated fair value of our available-for-sale marketable securities
        and
        investments by stated maturities at July 28, 2007 is as follows:
 (Amounts
                    in thousands)
                
                Estimated
                  Fair
                    Value
                
                Amortized
                    CostDue
                    InOne
                    year or less
                
                $
                46,177
                
                $
                46,170One
                    year through five years
                
                
                11,814
                
                
                11,785Over
                    five years through ten years
                
                
                5,200
                
                
                5,200Over
                    ten years
                
                
                114,255
                
                
                114,252Total
                
                $
                177,446
                
                $
                177,407
  We
        periodically review our investment portfolio to determine if there is an
        impairment that is other than temporary, and to date have not experienced
        any
        impairment in our investments that were other than temporary. In evaluating
        whether the individual investments in the investment portfolio are not other
        than temporarily impaired, we considered the credit rating of the individual
        securities, the cause of the impairment of the individual securities, and
        the
        severity of the impairment of the individual securities.
 
 Proceeds
        from the sale of the above auction rate securities were $65.8 million, $1.9
        million and $114.6 million in Fiscal 2007, Fiscal 2006 and Fiscal 2005,
        respectively. G ross
        realized losses from the sale
        of
        the above investments were
        $274,000, $3,000 and $579,000 in Fiscal 2007, Fiscal 2006 and Fiscal
        2005, respectively. For the purposes of determining gross realized gains
        and
        losses, the cost of securities is based upon specific identification. The
        realized losses and gains from the sale of marketable securities are reflected
        in interest income on our consolidated statements of earnings.
  F-14
  **3** **.
        Goodwill and Other Intangible Assets**
 
 In
        January 2005, we acquired 100% of the outstanding stock of Maurices
        Incorporated. The total purchase price was $328.3 million, net of cash acquired,
        which included $4.4 million of transaction fees. The transaction was financed
        by
        $114.3 million in cash (derived from the sale of investments), the issuance
        of
        $115 million 2.5% convertible senior notes due 2024, and $100 million from
        borrowings under a $250 million senior credit facility (consisting of a $100
        million term loan, and a $150 million revolving credit line under which no
        funds
        were drawn). Our consolidated financial statements include **maurices** ’
results
        of operations from January 2, 2005. We accounted for the acquisition as a
        purchase using the accounting standards established in SFAS No. 141, Business
        Combinations, and, accordingly, the excess purchase price over the fair market
        value of the underlying net assets acquired, or $132.6 million, was allocated
        to
        goodwill **.** In
        connection with the acquisition, there was an unsettled purchase price
        adjustment that would be ultimately determined upon finalization of the seller’s
        tax returns. This determination of the purchase price was resolved during
        the
        first quarter of Fiscal 2007, resulting in a $1.9 million reduction of the
        goodwill that was initially recorded. Goodwill
        amortization is deductible for tax purposes.
 
 In
        accordance with SFAS No. 142, *Goodwill
        and Other Intangible Assets* ,
        amortization of goodwill and indefinite life intangible assets is replaced
        with
        annual impairment tests. We perform an impairment test at least annually
        on or
        about June 30th or whenever events or changes in business circumstances
        necessitate determining whether an impairment charge related to the carrying
        value of our recorded goodwill or indefinite life intangible assets is needed.
 
 Other
        identifiable intangible assets consist of trade names, customer relationships
        and proprietary technology. Trade names have an indefinite life and therefore
        are not amortized. Customer relationships and proprietary technology constitute
        our identifiable intangible assets subject to amortization, which are amortized
        on a straight-line basis over their useful lives
  Other intangible assets were comprised of the following as of July 28,
          2007:
  (Amounts
                    in thousands)**Gross**
                  **Carrying
                    Amount**
                
                **Accumulated
                    Amortization**
                
                **Net
                    Amount**
                
                **Expected
                    Life**Customer
                    Relationship
                
                $
                2,200
                
                $
                812
                
                $
                1,388
                
                
                7
                    yearsProprietary
                    Technology
                
                
                3,298
                
                
                1,754
                
                
                1,544
                
                
                5
                    yearsTrade
                    Name
                
                
                106,000
                
                
                -
                
                
                106,000
                
                
                Indefinite**Total
                    intangible assets**
                
                $
                111,498
                
                $
                2,566
                
                $
                108,932
 The
        amortization for Fiscal 2007 was $1.1 million. The estimated annual amortization
        expense over the next five years is as follows: $1.1 million, $0.9 million,
        $0.5
        million, $0.3 million and $0.1 million, respectively.
 
 **4.
        Litigation**
 
 In
        2003,
        after a trial in the Superior Court of Connecticut, Waterbury District, a
        jury
        returned a verdict of $30 million of compensatory damages against us.  The
        court then entered a judgment of approximately $32 million in compensatory
        damages and expenses, which was subject to post-judgment interest.  In
        addition to the original litigation charge of $32 million recorded in Fiscal
        2003, we accrued interest and other amounts of approximately $3.3 million
        in the
        consolidated statement of earnings in Fiscal 2004.  In July 2005, the
        Supreme Court of Connecticut's decision to reverse the judgment against us
        became final. Upon the Supreme Court of Connecticut's decision reversing
        the
        judgment described above, approximately $35.3 million of previously recognized
        litigation charges were reversed in the consolidated statement of earnings
        in
        Fiscal 2005 and amounts held in the escrow account established in connection
        with our appeal were released.
 
 We
        are
        subject to ordinary routine litigation incidental to the business. Although
        the outcome of such items cannot be determined with certainty, in our opinion,
        dispositions of these matters are not expected to have a material adverse
        affect
        on our financial position, results of operations or cash flows.
  F-15
  **5.
        Debt**
  Our
        2.50%
        Convertible Senior Notes (“Convertible Senior Notes”), which have an aggregate
        principal amount of $115 million, are due 2024. We may redeem some or all
        of the
        Convertible Senior Notes for cash at any time on or after December 22, 2011
        at a
        redemption price equal to 100% of the principal amount of the notes plus
        accrued
        interest. Holders may convert their notes into cash and shares of our common
        stock, if any, at a conversion rate of 95.1430 shares per $1,000 principal
        amount of Convertible Senior Notes (equal to a conversion price of approximately
        $10.51 per share), during specified periods. Upon conversion, we would deliver
        cash for the aggregate principal amount of Convertible Senior Notes to be
        converted. The excess, if any, of the price of our common stock above $10.51
        per
        share would be payable in common shares. If the market price of the common
        stock
        exceeds the conversion price, we are required to use the treasury stock method
        in calculating diluted earnings per share for the number of shares to be
        issued
        for the excess value. As of July 30, 2007 and continuing through October
        26,
        2007, the holders of the Convertible Senior Notes may convert their notes
        as
        described above because our stock price closed at or above $12.61 per share
        for
        twenty trading days within the thirty trading day period ended on July 27,
        2007.
        As a result of the conversion criteria being met as of July 28, 2007 and
        July
        29, 2006 and the ability of the holders, at their option, to convert their
        notes, the Company has classified the Convertible Senior Notes as current
        liabilities in the accompanying consolidated balance sheets. On July 27,
        2007,
        the market value of the Convertible Senior Notes was $215.3 million as valued
        on
        PORTAL (Private Offering Resale and Trading through Automated
        Linkage).
  On
        December 21, 2005, we entered into a credit agreement with several lenders
        (the
“Credit Agreement”).Our credit agreement provides a senior secured
        revolving credit facility that provides for borrowings and issuance of letters
        of credit for up to $100 million, which we may request be increased up to
        $150
        million. The Credit Agreement will terminate on December 21, 2010 or earlier
        under certain conditions. Borrowings under the Credit Agreement are based
        on
        either LIBOR or the higher of the prime rate of JPMorgan Chase Bank, N.A.
        or the
        Federal Funds Effective Rate plus 0.50%. The interest rates under the Credit
        Agreement vary depending upon our adjusted leverage ratio. The Credit Agreement
        contains affirmative, negative and financial covenants which we were in
        compliance with at July 28, 2007, the most restrictive of which include a
        fixed
        charge coverage ratio and a limit on capital expenditures in any fiscal year.
        The Credit Agreement is collateralized by substantially all of our assets
        exclusive of the Dunnigan Realty, LLC assets, and Maurices Incorporated assets,
        and none of our subsidiaries have guaranteed the Credit Agreement. As of
        July
        28, 2007, $44 million was available under the Credit Agreement, which represents
        the $100 million from our senior secured revolving credit facility less $56
        million of outstanding letters of credit at July 28, 2007.
 
 On
        December 14, 2004, we entered into a senior credit facility with a number
        of
        banks (“Senior Credit Facility”). The Senior Credit Facility terminated on
        December 21, 2005 when we entered into the Credit Agreement discussed above.
        The
        Senior Credit Facility had consisted of a $150 million revolving credit facility
        and a $100 million term loan. As of the date of the termination, we had repaid
        the term loan and had not borrowed any funds under the $150 million revolving
        credit facility.
 
 In
        connection with the issuance of the Convertible Senior Notes and the Senior
        Credit Facility, we incurred approximately $4.0 million in underwriting costs
        and $4.1 million in professional fees. Such fees were deferred and included
        in
“Other assets” on the accompanying Consolidated Balance Sheets. Certain of these
        amounts were fully amortized to interest expense with the repayment of the
        $100
        million term loan and the termination of the Senior Credit Facility. At July
        28,
        2007, there were $3.5 million of unamortized costs.
 
 In
        connection with the purchase of the Suffern facility, Dunnigan Realty, LLC
        (“Dunnigan”), in July 2003, borrowed $34 million under a 5.33% rate mortgage
        loan. The Dunnigan mortgage loan (the “Mortgage”) is collateralized by a
        mortgage lien on the Suffern facility, of which the major portion is our
        corporate offices and **dressbarn’s** distribution center. Payments of principal and interest on the mortgage,
        a
        20-year fully amortizing loan, are due monthly through July 2023. In connection
        with the mortgage, we paid approximately $1.7 million in debt issuance costs.
        These costs were deferred and included in “Other assets” on the Consolidated
        Balance Sheets and are being amortized to interest expense over the life
        of the
        Mortgage.
 
 Debt
        consists of the following:
  July
                    28, 2007
                
                July
                    29, 2006(Amounts
                    in thousands)Dunnigan
                    Mortgage
                
                $
                29,751
                
                $
                30,899Convertible
                    Senior Notes
                
                
                115,000
                
                
                115,000$
                144,751
                
                $
                145,899
  Scheduled
        principal payments of the above debt for each of the next five fiscal years
        and
        beyond, excluding the Convertible Senior Notes which are payable on demand,
        is
        as follows: $1.2 million, $1.3 million, $1.3 million, $1.4 million, $1.5
        million
        and $23.0 million, respectively. Currently, the
        $115.0
        million of Convertible Senior Notes is not a scheduled
        payment.
  F-16
  Interest
        expense relating to the above debt was approximately $4.5 million for the
        fiscal
        year ended July 28, 2007, $4.6 million for the fiscal year ended July 29,
        2006
        and $6.3 million for the fiscal year ended July 30, 2005. Fees related to
        the
        Credit Agreement and the Senior Credit Facility totaled $0.3 million for
        the
        fiscal year ended July 28, 2007 and $0.4 million for the fiscal year ended
        July
        29, 2006.
  **6.
        Stock Repurchase Program**
  The
        Board
        of Directors authorized a $75 million stock repurchase program that was
        announced on April 5, 2001. As of July 28, 2007, we had purchased 5,895,400
        shares at an aggregate purchase price of approximately $46.7 million. During
        Fiscal 2007 and Fiscal 2005, 1,010,000 and 200,000 shares were purchased
        under
        this stock purchase program. There were no shares purchased during Fiscal
        2006.
        Purchases of shares of our common stock will be made at our discretion from
        time
        to time, subject to market conditions and at prevailing market prices, through
        open market purchases or in privately negotiated transactions. As soon as
        practicable, treasury (reacquired) shares are retired and treated as authorized
        but unissued shares.  As
        of
        July 28, 2007 there were 610,000 treasury shares which had been reacquired
        but
        not yet retired. A s
        of July
        28, 2007, the remaining authorized amount for stock purchases under the Program was
        $28
        million which was used during August 2007 to purchase approximately 1,600,000
        shares. In September 2007, our Board of Directors authorized an additional
        $100
        million stock buyback program.
  **7.
        Earnings Per Share**
 
 Basic
        earnings per share are computed based upon the weighted average number of
        common
        shares outstanding. The computation of diluted earnings per share assumes
        the
        exercise of all stock options using the treasury stock method and the conversion
        of the Senior Convertible Notes (see Note 5), to the extent dilutive. Diluted
        earnings per share are computed based upon the weighted average number of
        common
        and common equivalent shares outstanding. Common equivalent shares outstanding
        consist of shares covered by stock options and the Convertible Senior Notes,
        to
        the extent dilutive. All prior period common stock share amounts have been
        adjusted to reflect a two-for-one split of our common stock effective April
        3,
        2006.
 
 A
        reconciliation of basic and diluted weighted average number of common shares
        outstanding is presented below:
 (Amounts
                    in thousands)
                
                **July
                    28,**
                  **2007**
                
                **July
                    29,**
                  **2006**
                
                **July
                    30,**
                  **2005**Weighted
                    average number of common shares outstanding - basic
                
                
                62,020
                
                
                61,216
                
                
                59,570Net
                    effect of dilutive common stock equivalents that include stock
                    options and
                    convertible securities based on the treasurystock
                    method using the average market price
                
                
                8,002
                
                
                7,512
                
                
                1,588Weighted
                    average number of common shares outstanding - diluted
                
                
                70,022
                
                
                68,728
                
                
                61,158Anti-dilutive
                    common stock equivalents
                
                
                561
                
                
                -
                
                
                52
  The
        Convertible Senior Notes were dilutive at July 29, 2006 and July 28, 2007
        as the
        average price of our stock was more than the conversion price of the Convertible
        Senior Notes for the year, in accordance with EITF Issue No. 04-8, *The
        Effect of Contingently Convertible Debt on Diluted Earnings Per
        Share* .
        The
        number of additional shares related to the dilutive effect of the Convertible
        Senior Notes was approximately 5,565,000 shares for Fiscal 2007 and
        approximately 4,946,000 shares for Fiscal 2006. The Convertible Senior Notes
        were anti-dilutive in Fiscal 2005.
 
 Anti-dilutive
        common stock equivalents were excluded from the shares used in the computation
        of diluted earnings per share for Fiscal 2007 and Fiscal 2005, as they were
        anti-dilutive. There were no anti-dilutive shares for Fiscal 2006.
 
 F-17
  8.
        Employee Benefit Plans
  We
        sponsor a
        defined contribution retirement savings plan (401(k)) covering all eligible
        employees. We also sponsor an Executive Retirement Plan for certain officers
        and
        key executives. Both plans allow participants to defer a portion of their
        annual
        compensation and receive a matching employer contribution on a portion of
        that
        deferral. During Fiscal 2007, 2006 and 2005 we incurred expenses of
        approximately $3,794,000, $2,828,000 and $2,171,000, respectively, relating
        to
        the contributions to and administration of the above plans. These expenses
        are
        allocated to cost of sales and selling, general and administrative expenses
        in
        accordance with our accounting policies described in Note 1. We also sponsor
        an
        Employee Stock Purchase Plan, which allows employees to purchase shares of
        our
        stock during each quarterly offering period at a 10% discount through weekly
        payroll deductions. We do not provide any additional postretirement
        benefits.
  **9.
        Income Taxes**
 
 The
        components of the provision for income taxes were as follows:
 **Fiscal
                    Year Ended**(Amounts
                    in thousands)
                
                **July
                    28,**
                  **2007**
                
                **July
                    29,**
                  **2006**
                
                **July
                    30,**
                  **2005**Federal:Current
                
                $
                48,513
                
                $
                46,453
                
                $
                4,901Deferred
                
                
                (1,366
                )
                
                (4,480
                )
                
                22,28347,147
                
                
                41,973
                
                
                27,184State:Current
                
                
                10,360
                
                
                11,052
                
                
                1,512Deferred
                
                
                (167
                )
                
                (1,225
                )
                
                4,50410,193
                
                
                9,827
                
                
                6,016**Provision
                    for income taxes**
                
                $
                57,340
                
                $
                51,800
                
                $
                33,200
  Significant
        components of our deferred tax assets and liabilities were as
        follows:
  (Amounts
                    in thousands)
                
                **July
                    28,**
                  **2007**
                
                **July
                    29,**
                  **2006**Deferred
                    tax assets:Inventory
                    capitalization and inventory-related items
                
                $
                4,843
                
                $
                3,326Capital
                    loss carryover
                
                
                660
                
                
                590Accrued
                    payroll & benefits
                
                
                12,463
                
                
                7,941Share
                    based compensation
                
                
                6,198
                
                
                4,360Straight-line
                    rent
                
                
                9,428
                
                
                9,576Other
                    items
                
                
                4,401
                
                
                1,753**Total
                    deferred tax assets**
                
                
                37,993
                
                
                27,546Deferred
                    tax liabilities:Depreciation
                
                
                13,344
                
                
                14,329Intangibles
                
                
                16,056
                
                
                9,749Interest
                
                
                6,557
                
                
                4,163Other
                    items
                
                
                2,431
                
                
                2,923**Total
                    deferred tax liabilities**
                
                
                38,388
                
                
                31,164Valuation
                    allowance
                
                
                66
                
                
                -**Net
                    deferred tax liabilities**
                
                $
                461
                
                $
                3,618
  The
        Fiscal 2007 total net deferred tax liability is presented on the balance
        sheet
        as a current asset of $4.2 million and as a long-term liability of $4.7 million.
        The Fiscal 2006 total net deferred tax liability is presented on the balance
        sheet as a current asset of $2.3 million and as a long-term liability of
        $5.9
        million. The components of deferred tax assets and deferred tax liabilities
        were
        as follows:
  (Amounts
                  in thousands)
              
              **July
                  28,**
                **2007**
              
              **July
                  29,**
                **2006****(As
                  restated, see Note 13)**Total
                  current deferred tax assets
              
              $
              13,230
              
              $
              8,406Total
                  non-current deferred tax assets
              
              
              24,697
              
              
              19,140**Total
                  deferred tax assets**
              
              $
              37,927
              
              $
              27,546Total
                  current deferred tax liabilities
              
              
              8,988
              
              
              6,110Total
                  non-current deferred tax liabilities
              
              
              29,400
              
              
              25,054**Total
                  deferred tax liabilities**
              
              $
              38,388
              
              $
              31,164
  F-18
  Following
        is a reconciliation of the statutory Federal income tax rate and the effective
        income tax rate applicable to earnings before income taxes:
 **Fiscal
                    Year Ended****July
                    28, 2007**
                
                **July
                    29, 2006**
                
                **July
                    30, 2005**Statutory
                    tax rate
                
                
                35.0
                %
                
                35.0
                %
                
                35.0
                %State
                    taxes - net of federal benefit
                
                
                4.3
                %
                
                4.5
                %
                
                4.6
                %Tax-exempt
                    interest
                
                
                (1.5
                %)
                
                (0.7
                %)Other
                    - net
                
                
                (1.6
                %)
                
                0.8
                %
                
                (0.9
                %)Effective
                    tax rate
                
                
                36.2
                %
                
                39.6
                %
                
                38.7
                %
  **10.
        Commitments and Contingencies**
 
 *Lease
        commitments*
 
 We
        lease
        all of our stores. Certain leases provide for additional rents based on
        percentages of net sales, charges for real estate taxes, insurance and other
        occupancy costs. Store leases generally have an initial term of approximately
        10
        years with one or more 5-year options to extend the lease. Some of these
        leases
        have provisions for rent escalations during the initial term. We receive
        rental
        income and reimbursement for taxes and common area maintenance charges from
        two
        tenants that occupy a portion of the Suffern facility that are not affiliated
        with us. The rental income from the other tenants is shown as “other income” on
        our Consolidated Statements of Earnings.
 
 A
        summary
        of occupancy costs follows:
 **Fiscal
                    Year Ended****July
                    28,**
                  **2007**
                
                **July
                    29,**
                  **2006**
                
                **July
                    30,**
                  **2005**(Amounts
                    in thousands)Base
                    rentals
                
                $
                126,275
                
                $
                119,298
                
                $
                109,632Percentage
                    rentals
                
                
                4,113
                
                
                3,262
                
                
                2,690Other
                    occupancy costs
                
                
                41,909
                
                
                40,298
                
                
                32,547172,297
                
                
                162,858
                
                
                144,869Less:
                    Rental income from third parties
                
                
                (1,659
                )
                
                (1,526
                )
                
                (1,526
                )**Total**
                
                $
                170,638
                
                $
                161,332
                
                $
                143,343
 
 The
        following is a schedule of future minimum rentals under noncancelable operating
        leases as of July 28, 2007,
 (amounts
        in thousands):
  **Fiscal
                    Year**
                
                **Total**2008
                
                $
                144,5172009
                
                
                113,9302010
                
                
                90,8932011
                
                
                69,7602012
                
                
                48,205Subsequent
                    years
                
                
                70,432**Total
                    future minimum rentals**
                
                $
                537,737
 
 Although
        we have the ability to cancel certain leases if specified sales levels are
        not
        achieved, future minimum rentals under such leases have been included in
        the
        above table.
 
 *Leases
        with related parties*
 
 We
        lease
        two stores from our Chairman or related trusts. Future minimum rentals under
        leases with such related parties which extend beyond July 28, 2007, included
        in
        the above schedule, are approximately $312,000 annually and in the aggregate
        $1.1 million. The leases also contain provisions for cost escalations and
        additional rent based on net sales in excess of stipulated amounts. Rent
        expense
        for Fiscal years 2007, 2006 and 2005 under these leases amounted to
        approximately $389,000, $364,000 and $335,000, respectively.
  F-19
  *Contractual
        obligations and commercial commitments*
 
 In
        addition to the commitments represented in the above table, we enter into
        a
        number of cancelable and non-cancelable commitments during the year. Typically,
        these commitments are for less than a year in duration and are principally
        focused on the construction of new retail stores and the procurement of
        inventory. We do not maintain any long-term or exclusive commitments or
        arrangements to purchase merchandise from any single supplier. Preliminary
        commitments with our private label merchandise vendors typically are made
        five
        to seven months in advance of planned receipt date. Substantially all of
        our
        merchandise purchase commitments are cancelable up to 30 days prior to the
        vendor’s scheduled shipment date.
  **11.
        Stock-Based Compensation Plans**
  Our
        2001
        Stock Incentive Plan provides for the granting of either ISO’s or non-qualified
        options to purchase shares of common stock. At the November 30, 2005 Annual
        Shareholders Meeting, shareholders approved an additional 6 million shares
        available for issuance (for a total of 12 million) under the 2001 Stock
        Incentive Plan. As of July 28, 2007, there were approximately 6.5 million
        shares
        under the 2001 plan available for future grant. All of our prior stock option
        plans have expired as to the ability to grant new options. We issue new shares
        of common stock when stock option awards are exercised. Refer to the
        c onsolidated
        statements of shareholders’ equity and comprehensive income for new shares of
        common stock issued in Fiscal 2007, Fiscal 2006 and Fiscal 2005.
 
 Stock
        option awards outstanding under our current plans have generally been granted
        at
        exercise prices which are equal to the market value of our stock on the date
        of
        grant, generally vest over five years and expire no later than ten years
        after
        the grant date. Effective July 31, 2005, we recognize compensation expense
        ratably over the vesting period, net of estimated forfeitures. As of July
        28,
        2007, there was $14.3 million of total unrecognized compensation cost related
        to
        nonvested options, which is expected to be recognized over a remaining
        weighted-average vesting period of 3.3 years. The total intrinsic value of
        options exercised during Fiscal 2007 was approximately $14.8 million, during
        Fiscal 2006 was approximately $15.6 million and during Fiscal 2005 was
        approximately $6.4 million. The total fair value of options that vested during
        Fiscal 2007, Fiscal 2006 and Fiscal 2005,was approximately $5.5 million,
        $3.0
        million and $3.3 million, respectively.
 
 The
        following table summarizes the activities in all Stock Option Plans and changes
        during Fiscal 2007:
  July
                    28, 2007Options
                
                Weighted
                  Average
                  Exercise
                  PriceOptions
                    outstanding - beginning of year
                
                
                6,255,862
                
                $
                8.81Granted
                
                
                531,700
                
                
                23.04Cancelled
                
                
                (171,040
                )
                
                12.40Exercised
                
                
                (939,193
                )
                
                6.93Outstanding
                    end of year
                
                
                5,677,329
                
                $
                10.35Options
                    exercisable
                  at
                    year-end
                
                
                2,199,069
                
                $
                7.13Weighted-average
                    fair
                  value
                    of options granted
                  during
                    the year
                
                
                
                
                $
                9.27
 At
        July
        28, 2007, we had 5,354,865 options vested and expected to vest with an
        aggregate intrinsic value of $46.2 million and a weighted-average remaining
        contractual term of 7.2 years. The weighted-average fair value of options
        granted during Fiscal 2006 was $5.07 and during Fiscal 2005 was
        $3.87.
 
 F-20


The
        following table summarizes information about stock options outstanding at
        July
        28, 2007:
 
 Range
                  of Exercise Prices
              
              Number
                  Outstanding as of July 28, 2007
              
              Weighted
                  Average Remaining Life
              
              Weighted
                  Average Exercise Price
              
              Number
                  Exercisable as of July 28, 2007
              
              Weighted
                  Average Exercise Price$2.84
              
              9,100
              
              1.2
                  years
              
              $2.84
              
              9,100
              
              $2.843.52
                  - 5.19
              
              685,745
              
              2.6
                  years
              
              4.02
              
              685,745
              
              4.025.63
                  - 8.19
              
              1,929,040
              
              5.9
                  years
              
              7.08
              
              1,085,296
              
              6.988.74
                  - 12.93
              
              2,412,528
              
              8.1
                  years
              
              11.60
              
              357,128
              
              11.4617.09
                  - 23.30
              
              640,916
              
              9.2
                  years
              
              22.36
              
              61,800
              
              19.90$2.84
                  - $23.30
              
              5,677,329
              
              6.8
                  years
              
              $10.35
              
              2,199,069
              
              $7.13
 
 The
        options exercisable at July 28, 2007, have an aggregate intrinsic value of
        $24,826,455 and a weighted average contractual term of 5.1 years.
 
 The
        2001
        Stock Incentive Plan also allows for the issuance of restricted shares. Prior
        to
        January 2005, restricted shares did not count against the 2001 Stock Incentive
        Plan. Effective January 2005, any shares of restricted stock are counted
        against
        the shares available for future grant limit as three shares for every one
        restricted share granted. In general, if options are cancelled for any reason
        or
        expire, the shares covered by such options again become available for grant.
        If
        a share of restricted stock is forfeited for any reason, three shares
        become available for grant.
  In
        accordance with SFAS No. 123R, the fair value of restricted stock awards is
        estimated on the date of grant based on the market price of our stock and
        is
        amortized to compensation expense on a graded basis over the related vesting
        periods, which are generally five years. As of July 28, 2007, there was $0.9
        million of total unrecognized compensation cost related to nonvested restricted
        stock awards, which is expected to be recognized over a remaining
        weighted-average vesting period of 3.9 years. The unrecognized compensation
        cost related to nonvested restricted stock awards was recorded as unearned
        compensation in shareholders’ equity at July 30, 2005. The total fair value of
        the restricted stock awards recognized as compensation expense during the
        fifty-two weeks ended July 28, 2007 was $1.1 million. Compensation expense
        recognized for restricted stock awards during the fifty-two weeks ended July
        29,
        2006 was $641,000. We
        recognized $398,000 of compensation expense in Fiscal 2005 .
 
 Following
        is a summary of the changes in the shares of restricted stock outstanding
        during
        Fiscal 2007:
 
 Number
                  of Shares
              
              Weighted
                  Average Grant Date Fair Value Per ShareRestricted
                  stock awards at July 29, 2006
              
              155,440
              
              $
                  9.62Granted
              
              38,500
              
              24.19Vested
              
              (51,973)
              
              9.43Forfeited
              
              (4,800)
              
              15.03Restricted
                  stock awards at July 28, 2007
              
              137,167
              
              $
                  13.59
 
 
 Our
        Employee Stock Purchase Plan allows eligible full-time employees to purchase
        a
        limited number of shares of our common stock during each quarterly offering
        period at a 10% discount through weekly payroll deductions. During the fifty-two
        weeks ended July 28, 2007, we sold approximately 15,000 shares to employees
        at
        an average discount of $2.16 per share under the Employee Stock Purchase
        Plan.
        The compensation expense recognized for the discount given under the Employee
        Stock Purchase Plan was approximately $33,000 for the fifty-two weeks ended
        July
        28, 2007.
 
 Prior
        to
        the adoption of SFAS No. 123R, we presented all tax benefits resulting from
        the exercise of stock options as operating cash flows in the Consolidated
        Statement of Cash Flows. SFAS No. 123R requires that cash flows resulting
        from tax deductions in excess of the cumulative compensation cost recognized
        for
        options exercised (“excess tax benefits”) be classified as financing cash flows.
        For the fifty-two weeks ended July 28, 2007, excess tax benefits realized
        from
        the exercise of stock options was $5.7 million.
 
 F-21
 
 **12.
        Segments**
 
 Our
        reportable segments are the **dressbarn** brands,
        which are used in 617 Combo
        stores (a combination of **dressbarn** and **dressbarn**  **woman** stores),
        161 **dressbarn** stores,
        43 **dressbarn**  **woman** stores in 46
        states as of July 28, 2007 and the **maurices** brand,
        which is used in 607 stores in 42 states as of July 28, 2007. We completed
        the
        acquisition of Maurices Incorporated in January 2005.
 
 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.
        The **dressbarn** brands
        primarily attract female consumers in the mid 30’s to mid 50’s age range, while **maurices** ’
        fashions are designed to appeal to the 17 to 34 year-old-female. During third
        quarter of Fiscal 2007 **maurices** began
        transitioning out of the men’s product line in order to introduce female
        plus-sizes in the fourth quarter of Fiscal 2007. Our **maurices** stores
        are concentrated in small markets in the United States, while our **dressbarn** and **dressbarn**  **woman** stores
        tend to be in larger population markets. Substantially
        all of **maurices’** management team prior to the acquisition continues to manage the daily
        operations of **maurices** . **maurices** also
        distributes goods to its stores through a separate distribution center. **maurices** also has
        separate financial reporting systems from **dressbarn** .
        We
        believe that **maurices** is
        currently a reportable segment due to management’s review of **maurices’** separately available operating results and other financial information to
        regularly assess its performance for decision-making purposes. Income tax
        information by segment has not been included as taxes are calculated at a
        company-wide level and are not allocated to each segment.
 
 Information
        on the **dressbarn** and **maurices** brands
        and the reconciliation to operating earnings, are as follows:
  (Amounts
                    in millions)
                
                **Fiscal
                    2007**
                
                **Fiscal
                    2006**
                
                **Fiscal
                    2005**Net
                    sales**dressbarn
                    and dressbarn woman**brands
                
                $
                934.8
                
                $
                876.2
                
                $
                788.2**maurices**brand
                
                
                491.8
                
                
                424.1
                
                
                212.1Consolidated
                    net sales
                
                $
                1,426.6
                
                $
                1,300.3
                
                $
                1,000.3Operating
                    income**dressbarn
                    and dressbarn woman**brands
                
                $
                94.9
                
                $
                81.0
                
                $
                76.9**maurices**brand
                
                
                60.1
                
                
                50.9
                
                
                15.8Consolidated
                    operating income
                
                
                155.0
                
                
                131.9
                
                
                92.7Interest
                    income
                
                
                7.0
                
                
                2.7
                
                
                1.8Interest
                    expense
                
                
                (4.9
                )
                
                (5.3
                )
                
                (10.2
                )Other
                    income
                
                
                1.4
                
                
                1.5
                
                
                1.5Earnings
                    before provision for income taxes
                
                $
                158.5
                
                $
                130.8
                
                $
                85.8Depreciation
                    and amortization**dressbarn
                    and dressbarn woman**brands
                
                $
                28.1
                
                $
                25.9
                
                $
                25.1**maurices**brand
                
                
                17.7
                
                
                15.8
                
                
                9.4Consolidated
                    depreciation and amortization
                
                $
                45.8
                
                $
                41.7
                
                $
                34.5Capital
                    expenditures**dressbarn
                    and dressbarn woman**brands
                
                $
                37.7
                
                $
                31.7
                
                $
                25.2**maurices**brand
                
                
                25.3
                
                
                16.6
                
                
                6.2Consolidated
                    capital expenditures
                
                $
                63.0
                
                $
                48.3
                
                $
                31.4
 
 (Amounts
                    in millions)
                
                **July
                    28, 2007**
                
                **July
                    29, 2006**Total
                    assets**dressbarn
                    and dressbarn woman**brands
                
                $
                822.3
                
                $
                703.7**maurices**brand
                
                
                159.0
                
                
                139.0Total
                    assets
                
                $
                981.3
                
                $
                842.7Merchandise
                    inventories**dressbarn
                    and dressbarn woman**brands
                
                $
                130.4
                
                $
                113.9**maurices**brand
                
                
                66.7
                
                
                56.6Total
                    merchandise inventories
                
                $
                197.1
                
                $
                170.5
  F-22
  **13.**  **Restatement
          of Previously Issued Financial Statements**
  In
              the
              fourth quarter of Fiscal 2007, we identified errors in the way we had
              previously
              classified our Convertible Senior Notes (Note 5) on our balance sheet
              as of July
              29, 2006. The balance sheet classification of the Notes between a current
              liability and a long-term liability is dependent upon certain conversion
              rights,
              as defined in Note 5 - Debt. As of January 30, 2006 and continuing
              through
              October 26, 2007, the holders of the Notes are able to convert their
              Notes as
              described in Note 5 because our stock price closed at or above $12.61
              per share
              for twenty trading days within the thirty trading day period. Accordingly,
              this
              obligation should have been classified as a current liability in the
              accompanying consolidated balance sheet as of July 29, 2006. In addition
              we
              identified an error in the way we had previously classified our deferred
              compensation between current liabilities and long-term liabilities.
              These
              reclassifications required our balance sheet as of July 29, 2006 to
              be restated,
              and affected our previously reported current deferred tax assets, current
              liabilities, long-term debt, and deferred income tax liabilities as
              of July 29,
              2006 and our consolidated statements of cash flows for the fiscal years
              ended
              July 26, 2006 and July 30, 2005 to be restated. These reclassifications
              do not
              affect the net cash provided by operating activities, net cash used
              in investing
              activities or net cash provided by (used in) financing
              activities.
 
 These
          restatement adjustments did not impact our previously reported Consolidated
          Statements of Earnings or Consolidated Statements of Shareholders’ Equity.
 
 Following
          is a summary of the significant effects of these restatements on our
          consolidated balance sheets for Fiscal year 2006 and the consolidated statement
          of cash flows for Fiscal year 2006 and Fiscal year 2005:
 (Amounts
                      in thousands)
                  
                  **Consolidated
                      Balance Sheet****Previously****Fiscal
                      year ended July 29, 2006**
                  
                  **reported**
                  
                  **Adjustments**
                  
                  **As
                      restated**Currentportion
                      of deferred income tax assets
                  
                  $
                  6,459
                  
                  $
                  (4,163
                  )
                  $
                  2,296Total
                      current assets
                  
                  
                  349,363
                  
                  
                  (4,163
                  )
                  
                  345,200Total
                      Assets
                  
                  
                  846,860
                  
                  
                  (4,163
                  )
                  
                  842,697Convertible
                      Senior Notes
                  
                  
                  -
                  
                  
                  115,000
                  
                  
                  115,000Accrued
                      salaries, wages and related expenses
                  
                  
                  38,917
                  
                  
                  (13,213
                  )
                  
                  25,704Total
                      Current Liabilities
                  
                  
                  227,533
                  
                  
                  101,787
                  
                  
                  329,320Long-term
                      debt
                  
                  
                  144,751
                  
                  
                  (115,000
                  )
                  
                  29,751Deferred
                      rent and other long term liabilities
                  
                  
                  55,352
                  
                  
                  13,213
                  
                  
                  68,565Deferred
                      income tax liabilities
                  
                  
                  10,077
                  
                  
                  (4,163
                  )
                  
                  5,914Total
                      liabilities
                  
                  
                  437,713
                  
                  
                  (4,163
                  )
                  
                  433,550Total
                      Liabilities and Shareholders’ Equity
                  
                  $
                  846,860
                  
                  $
                  (4,163
                  )
                  $
                  842,697
 (Amounts
                      in thousands)
                  
                  **Consolidated
                      Statement of Cash Flows****Previously****Fiscal
                      year ended July 29, 2006**
                  
                  **reported**
                  
                  **Adjustments**
                  
                  **As
                      restated****Operating
                      activities:**Deferred
                    taxes
                  
                  $
                  (7,227
                  )
                  $
                  1,522
                  
                  $
                  (5,705
                  )Increase
                      in accrued salaries, wages and related expenses
                  
                  
                  3,708
                  
                  
                  (148
                  )
                  
                  3,856(Decrease)/increase
                    in income taxes payable
                  
                  
                  11,361
                  
                  
                  (1,522
                  )
                  
                  9,839Increase
                      in other long-term liabilities
                  
                  
                  6,066
                  
                  
                  (148
                  )
                  
                  5,918**Net
                      cash provided by operating activities**
                  
                  **$**
                  **164,086**
                  
                  **$**
                  **-**
                  
                  **$**
                  **164,086**
  **Previously****Fiscal
                      year ended July 30, 2005**
                  
                  **reported**
                  
                  **Adjustments**
                  
                  **As
                      restated****Operating
                      activities:**Deferred
                    taxes
                  
                  $
                  25,690
                  
                  $
                  1,097
                  
                  $
                  26,787Increase
                      in accrued salaries, wages and related expenses
                  
                  
                  7,578
                  
                  
                  (2,273
                  )
                  
                  5,305(Decrease)/increase
                    in income taxes payable
                  
                  
                  (5,456
                  )
                  
                  (1,097
                  )
                  
                  (6,553
                  )Increase
                      in other long-term liabilities
                  
                  
                  2,607
                  
                  
                  2,273
                  
                  
                  4,880**Net
                      cash provided by operating activities**
                  
                  **$**
                  **105,583**
                  
                  **$**
                  **-**
                  
                  **$**
                  **105,583**
 F-23
 **14.
        Quarterly Results of Operations (UNAUDITED)**
 
 (Amounts
        in thousands, except per share data)
  **Fiscal
                    Year Ended July 28, 2007**
                
                **Fourth
                    Quarter**
                
                **Third
                    Quarter**
                
                **Second
                    Quarter**
                
                **First
                    Quarter**Net
                    sales
                
                $
                379,902
                
                $
                347,923
                
                $
                340,344
                
                $
                358,438Cost
                    of sales, including occupancy and buying costs(excluding
                    depreciation)
                
                
                216,010
                
                
                205,378
                
                
                211,288
                
                
                209,516Income
                    taxes (2)
                
                
                20,054
                
                
                13,216
                
                
                6,610
                
                
                17,460Net
                    earnings
                
                
                33,629
                
                
                23,111
                
                
                17,024
                
                
                27,418Earnings
                    per share (1)Basic
                
                $
                0.54
                
                $
                0.37
                
                $
                0.27
                
                $
                0.45Diluted
                
                $
                0.48
                
                $
                0.33
                
                $
                0.24
                
                $
                0.40**Fiscal
                    Year Ended July 29, 2006**
                
                **Fourth
                    Quarter**
                
                **Third
                    Quarter**
                
                **Second
                    Quarter**
                
                **First
                    Quarter**Net
                    sales
                
                $
                343,305
                
                $
                327,176
                
                $
                310,907
                
                $
                318,889Cost
                    of sales, including occupancy and buying costs(excluding
                    depreciation)
                
                
                199,909
                
                
                193,764
                
                
                193,184
                
                
                186,774Income
                    taxes
                
                
                14,111
                
                
                13,968
                
                
                8,196
                
                
                15,525Net
                    earnings
                
                
                24,443
                
                
                20,031
                
                
                14,112
                
                
                20,368Earnings
                    per share (1)Basic
                
                $
                0.40
                
                $
                0.33
                
                $
                0.23
                
                $
                0.34Diluted
                
                $
                0.35
                
                $
                0.29
                
                $
                0.21
                
                $
                0.32
  (1)
              Earnings
                  per share is computed independently for each period presented.
                  As a
                  result, the total of the per share earnings for the four quarters
                  does not
                  equal the annual earnings per share. All earnings per share amounts
                  reported above reflect the effect of the 2-for-1 stock split, effective
                  April 3, 2006.
 
 (2)
              The
                  income tax provision for the second quarter of Fiscal 2007 was
                  favorably
                  impacted by $2.3 million, primarily as a result of one-time adjustments
                  to
                  certain deferred tax accounts.
 
 F-24