New York—Ann Inc. today reported its fourth quarter profit nearly doubled, helped by sales at its LOFT stores. Separately, the parent to Ann Taylor and LOFT will undergo a realignment which should save about $25 million but result in the elimination of about 100 jobs.
For the quarter ended Feb. 1, the women’s specialty retail company said net income rose to $4.7 million, or 10 cents a share, from $2.4 million, or 5 cents a share, a year earlier. Analysts had expected 7 cents a share.
Total net sales rose 2.6% to $623.3 million, slightly below the average analyst estimate of $623.8 million. By brand, net sales at Ann Taylor fell slightly to $246.2 million while LOFT sales rose to $377.1 million.
Total company comparable sales increased 2.9% compared to a decrease of 0.7% last year. At Ann Taylor, comparable sales declined 1.1% and at LOFT, it increased 5.7%
Pent Up Demand for Spring?
Gross margin improved 20 basis points to 49.3% , primarily due to “effective planned promotional activity at both Ann Taylor and LOFT,” partially offset by a higher level of promotional activity in its factory/outlet channel.
“For the fourth quarter, net sales, comparable sales and gross margin rate all showed improvement from the fourth quarter of 2012,” said Kay Krill, chief executive. “However, as previously reported, soft traffic and tepid consumer spending across the industry negatively impacted us, particularly in factory outlet centers and in those regions that were negatively affected by extreme winter weather.”
Commenting on the strategic realignment revealed today, Krill announced that Gary Muto would become president of Ann Inc. brands, where “he will be primarily focused on design, merchandising and marketing for all channels of the Ann Taylor and LOFT brands.”
Krill noted that the realignment is expected to result in ongoing annualized pre-tax operating savings of approximately $25 million, of which approximately $15 million is expected to be realized in fiscal 2014.
As a result though, about 100 jobs, or 5% of its full-time employees, would be eliminated.
For the first quarter, Ann Inc. forecast total net sales to be about $600 million, slightly below analysts’ average estimate for $613.3 million.
“We are approaching the first-quarter outlook with caution given the extreme weather conditions, the heightened promotional environment and soft traffic,” Krill told analysts on a conference call.
But some analysts said they were more optimistic about spring sales.
“What is encouraging from the call is that spring fashion continues to resonate in some of the warmer climate regions, which gives them some potential for pent up demand when temperature in East becomes favorable,” Mizuho Securities analyst Betty Chen said.