New York—Ann Inc. today blamed unseasonably cold weather that hurt sales—especially at its LOFT stores—for the promotions that lead to a 27% fall in its first quarter profit.
For the quarter ended May 4, the parent to Ann Taylor posted net income of $20.91 million, 44 cents a share, compared to $28.73 million, or 58 cents a share, from a year earlier. Still, the results beat analysts’ average estimate for 42 cents a share.
Net sales rose 3% to $574.51 million missing analysts’ estimate for $580.54 million. By brand, Ann Taylor’s net sales totaled $219.3 million compared to net sales of $212.4 million in the first quarter 2012. At the LOFT brand, net sales across all channels were $355.2 million compared to net sales of $348.0 million in the first quarter 2012.
Total comparable sales edged down 0.5%. Ann Taylor posted a comparable store sales increase of 1.9% reflecting an increase of 6.2% at Ann Taylor, partially offset by a decrease of 5.8% at Ann Taylor Factory channel. At LOFT, comparable sales decreased 1.9%, reflecting decreases of 0.9% at LOFT and 7.9% at LOFT Outlet.
“As previously noted, our first quarter performance reflected the impact of unseasonably cold weather, which negatively affected sales of warm weather product, primarily at LOFT,” said Kay Krill, chief executive. “As a result, we were more promotional than planned to clear through inventory in advance of second quarter deliveries.”
May Comp Sales Turn Positive
Gross margin narrowed to 55.8% from 56.6 percent due to an increase in merchandise margin rate offset by higher shipping costs associated with multi-channel sales.
Ann Inc. noted that the more seasonable climate in May has lead to positive comp sales at Ann Taylor and LOFT and that the company is on track to higher profits and comp sales in its second quarter.
“Looking ahead, we are well-positioned to deliver another consecutive year of profitable growth for Ann Inc., driven by the success of our strategic initiatives and strong performance at both brands,” Krill added.
For its second quarter, the company expects total net sales to be about $640 million, reflecting a comparable store sales increase in the “mid-single digits.” Analysts’ consensus expects $637.44 million.
As for its full fiscal year, Ann Inc. slightly reduced its forecast to $2.54 billion from $1.565 billion in its March forecast. Comparable store sales are expected to increase in the mid-single digits.
Analysts’ estimate expects sales of $2.52 billion for the year.