Kate Hudson is the new face for Ann Taylor stores this spring
New York–Ann Inc.’s fourth quarter profit plunged 73% as its Ann Taylor division relied on more discount and increased promotional activity during the holiday season.
For the quarter ended Jan. 28, the specialty retailer saw net income fall to $2.18 million, or 4 cents a share, from $7.97 million, or 14 cents, a year earlier. Excluding restructuring charges, Ann Inc. said its profit would have totaled 10 cent a share.
Total Sales rose 10% to $566.7 million, with comparable store sales increasing 5%. Although sales at its lower priced LOFT division grew 17.4% to $329.3 million, Ann Taylor only saw sales increase 1% to $237.4 million with its comparable store sales declining 11%. LOFT posted an 8.1% increase in comparable store sales.
Total gross margin narrowed to 48.9% from 51.7% mostly due to Ann Taylor’s promotions.
Ann Inc. missed analysts’ average estimate expected for the quarter of 9 cents a share in earnings on sales of $566.8 million.
The company, which recently had lowered its fourth quarter expectations, said it would be stepping up plans to reduce promotions, and improve assortments and customer service in its Ann Taylor stores.
According to Kay Krill, coo, the company sees improvement at Ann Taylor this year, which will be spearheaded by Brian Lynch, former Ann Taylor Factory and LOFT outlets president, who is the new president at Ann Taylor.
2012: “Drive Improved Gross Margin and Profitability”
“Our strategy is to reduce our overall level of promotion and drive improved gross margin and profitability, even at the expense of comparable sales growth,” Krill told analysts on a conference call. Furthermore, the Ann Taylor assortments will be updated with more emphasis on separates and dresses rather than suits.
Krill also said the company would be continuing to expand its new concept stores, which now include 44 doors. “Based on the strong results, I continue to be very excited about our strategy to expand our fleet of new concept stores, and we will be adding approximately 40 of these in fiscal 2012” she said.
“Beginning in the second quarter, we expect sales, comps, gross margin rate and profitability in the stores channel to improve in every quarter over the year-ago period through the balance of the year, Krill said. “In addition, in the e-commerce and factory channels, we expect continue to deliver profitable sales growth over the course of the year. Overall, I am confident in the direction the team is taking and look forward to improved performance at Ann Taylor as we progress through 2012.
Retail analysts seemed pleased with the positive 2012 forecast and shares of the company rose.
“With fourth-quarter behind, inventory well positioned, and fashion starting to improve at core Ann Taylor, we continue to see 2012 as an inflection year that benefits from a host of sales and margin catalysts,” Roxanne Meyer, UBS analyst said.
