AnnTaylor posts loss, sees challenging year

NEW YORK Fri Mar 14, 2008 10:32am EDT

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NEW YORK (Reuters) - AnnTaylor Stores Corp (ANN.N) posted a quarterly loss on Friday, hurt by restructuring charges, and forecast profit below expectations, saying the current fiscal year will be "challenging."

The news sent shares of the women's apparel retailer down 7 percent.

"The macro environment has certainly had a major impact on our traffic trends as well as the level of promotional activity required to motivate clients to make a purchase," Chief Executive Kay Krill said on a conference call.

Its fourth-quarter net loss was $6.7 million, or 11 cents per share, compared with net income of $21.5 million, or 31 cents per share, a year ago.

Excluding a restructuring charge, the retailer said it earned 19 cents per share. On that basis, analysts, on average, had been expecting profit of 20 cents per share, according to Reuters Estimates.

AnnTaylor, which operates the LOFT chain in addition to its namesake stores, said quarterly net sales dropped to $600.8 million from $610.5 million a year ago.

Sales at stores open at least a year fell 7.8 percent at Ann Taylor stores, which sells clothes women can wear to work, and declined 0.5 percent at the LOFT chain, which offers more casual, less expensive clothing.

Customer traffic during the quarter fell at both chains.

AnnTaylor, like Chico's FAS Inc (CHS.N), Talbots Inc TLB.N and Coldwater Creek Inc (CWTR.O), has been hard hit by the slowdown in consumer spending, as its customers, middle-aged women, spend less in the face of higher food and fuel prices, declining home values and a credit crunch.

The retailers are also suffering as a dearth of must-have fashion items keep customers from splurging on new clothes and accessories.

Hoping to improve results, AnnTaylor is closing underperforming stores, opening fewer new stores and cutting jobs at its headquarters.

It is also keeping a close eye on expenses and inventory. Krill said the retailer is trying to spark sales by stocking more stylish, fashionable merchandise.

She said shoppers are still showing a willingness to buy items that are new -- "meaning something that isn't already in her closet" -- like a new hot color.

AnnTaylor expects the first half of the fiscal year to be especially challenging.

It forecast first-quarter earnings of 35 cents to 40 cents per share, excluding restructuring costs, and fiscal year earnings of $1.80 to $1.90 per share, excluding those costs.

Wall Street, on average, was expecting profit of 43 cents in the first quarter, and $1.95 for the full year.

The company also said it will no longer report sales results on a monthly basis, as is standard among most major U.S. retail chains.

The company recorded an aftertax restructuring charge of $18.2 million, or 30 cents per share, in the latest quarter related to job cuts and store closures.

Shares fell $1.71 to $22.15 in morning New York Stock Exchange trading.

(Additional reporting by Jennifer Coogan; editing by Jeffrey Benkoe)

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