New York—Helped by sales increases at its LOFT stores and improved gross margin, Ann Inc. reported today that its first quarter profit rose 5%, ahead of forecasts.
For the quarter ended April 28, Ann Inc. posted a profit of $28.7 million, or 58 cents a share, up from $27.3 million, or 51 cents, a year earlier.
Total net sales grew 7% to $560.4 million with comparable store sales up 3.8% on top of a 7.8% increase a year ago. At Ann Taylor stores, comparable sales decreased 6.9%. LOFT posted comp sales of 11.3%.
Ann Inc.’s earnings came in ahead of the 51 cents a share analysts’ average estimate expected, but just missed on their sales forecast for $560.83 million.
“Our gross margin rate also improved dramatically from the fourth quarter of 2011, driven by increased profits at both the Ann Taylor and LOFT brands,:” said Kay Krill, president/ceo.
The company’s gross margin narrowed slightly to 56.6% from 57.3%, reflecting a strong gross margin rate performance at Ann Taylor and a slightly lower gross margin rate at LOFT.
“By brand, LOFT once again delivered a phenomenal quarter, continuing its strong momentum across all channels,” Krill said. “Clients responded positively to LOFT’s entire product offering, its compelling value proposition and engaging in-store experience, all of which contributed to very strong conversion.
Ann Taylor Concept Stores: ‘Significantly Outperform’
At Ann Taylor, Krill said the company had “significantly reduced promotional activity as we focused on reinforcing the aspirational nature of the brand, which resulted in a higher gross margin rate and lower comparable sales.”
Krill told analysts on a conference call that the Ann Taylor concept stores “once again, significantly outperformed, delivering in excess 50% higher productivity than the balance of the chain.”
The company opened two new concept stores during the quarter on Michigan Avenue in Chicago and the Prudential Center in Boston. Ann Taylor also downsized or relocated three existing stores to the new format, giving Ann Taylor a total of 49 new concept stores at the end of its first quarter.
For its fiscal 2012, Ann Inc. still projects total net sales to be $2.36 billion, reflecting a total company comparable sales increase in the mid-single digits. Analysts’ average estimate expects sales of $2.38 billion.
But Ann Inc.’s second quarter estimate was even more conservative: total net sales of $585 million with comparable store sales increase in the mid-single digits. Analysts’ consensus is looking for $593.25 million.