For the quarter ended Nov. 2, Ann posted net income of $41.2 million, or 89 cents a share, up from $40.7 million, or 84 cents a share, a year earlier. (The year-earlier profit was 76 cents when excluding a benefit related to the recognition of gift card and merchandise credit breakage.) Analysts’ average estimate expected 86 cents.
Net sales were up 7% to $657.5 million, beating analysts’ estimate for $654.2 million in sales. Total comparable store sales rose 3.7%.
At LOFT, total comp store sales rose 5.6% reflecting a 6.3% increase at LOFT stores and an 1.8% increase at its outlet stores. Ann Taylor posted a 0.6% increase in comp stores reflecting a 4.4% increase at Ann Taylor stores and a 6.9% decline at its factory stores.
Gains at LOFT
“Ann Inc. delivered outstanding performance this quarter. Despite a challenging and highly promotional retail environment, we achieved a double-digit increase in earnings per share, excluding the effect of a one-time 8 cents benefit in the third quarter of last year,” President/CEO Kay Krill said.
“Among the highlights for the quarter, LOFT generated positive momentum on top of its strong performance last year. Our clients responded very well to the brand’s fashionable assortment and exceptional value. At Ann Taylor, we achieved continued success with our versatile wear-to-work offering, as well as our new shoe and jewelry collections,” Krill added.
Gross margin narrowed to 55.7% from 57.9% last year due to the highly competitive, promotional environment.
That promotional environment in mind for fourth quarter, Ann Inc. forecast a mid-single digit increase in its comp store sales with total net sales to be about $640 million. Analysts’ estimate is for $646.23 million.
For full fiscal year, the women’s specialty retailer forecast total net sales to be about $2.52 billion, including a low-to-mid-single digit comp store sales increase. Analysts’ now expect about $2.51 billion in sales.
However, Ann Inc. said it expected its gross margin to fall to 49.5% from 55.7% in the third quarter.
“Looking ahead, both brands have entered the fourth quarter in an excellent position, and our strategic growth initiatives continue to add value on both the top and bottom line. We have now reported more than 90% of our anticipated annual earnings and are on track to deliver another consecutive year of record earnings per share,” Krill said.