* Same-store sales flat in Q4
* Total sales ahead of company and analyst expectations
* Gross margin slightly higher than expected
* Shares rise more than 12 percent (Adds analyst comment, background; changes dateline, previous CHICAGO)
NEW YORK, Feb 2 (Reuters) - Women's clothing retailer AnnTaylor Stores Corp ANN.N said on Tuesday that its fourth-quarter earnings would beat expectations after sales and gross margins came in better than expected.
AnnTaylor shares soared 12.4 percent to $15.05 in morning trading.
The retailer, which runs its namesake Ann Taylor chain and the more-casual, less-expensive LOFT stores, said earnings should top expectations and be "substantially higher" than a year earlier, but it did not provide a specific forecast.
The company said sales at stores open at least a year were about flat and total sales were about $470 million.
AnnTaylor had previously forecast a drop in sales from the $462.4 million reported in the third quarter. Analysts, on average, had forecast sales of $453.3 million, according to Thomson Reuters I/B/E/S.
Same-store sales at the Ann Taylor chain should be down about 7 percent, topping expectations for a low-to-mid teens percentage range decline. At LOFT, same-store sales should rise about 2 percent, in line with expectations for such sales to be flat to up slightly.
The performance was driven by a better selection of products at both chains, a successful promotional strategy and a "clean" inventory position, Chief Executive Kay Krill said in a statement.
ON THE RIGHT TRACK
Recent sales trends at Ann Taylor make the company more confident that the brand is on the right track, Krill added.
Like other retailers specializing in clothes for mature women, AnnTaylor has struggled in the downturn as many of its customers cut back on shopping for themselves before cutting back on family members. Problems at the namesake chain have been more acute, as the weak job market hurt sales of suits and other clothes for professional women to wear to work.
UBS analyst Roxanne Meyer said she was encouraged by the spring merchandise at both chains and has seen signs of more full-price sales at Ann Taylor, as well as an improvement in the women's apparel sector as a whole.
"Today's preannouncement illustrates that not only the margin story is clicking, but that topline is improving due to better product and a successful promotional strategy, particularly at core Ann Taylor, which has been the significant drag on the business," Meyer wrote in a note to clients.
By contrast, Jefferies analyst Randal Konik said he was not surprised by the news, as most retailers have been reporting good sales results for the holiday quarter. He also cautioned that the company may have trouble further reducing its cost base.
"Given our guarded view on the company's brand strength, competitive position and difficulties in being able to drive further gross margin gains and expense reductions, we would look to reduce exposure (to) AnnTaylor shares," Konik wrote.
AnnTaylor said its fourth-quarter gross margin rate should approach 52 percent, up from 35.7 percent in the fourth quarter of 2008 but below the third quarter rate of 57.3 percent.
The company said back in November that it expected fourth-quarter gross margin to fall from the third quarter level due to promotional activity during the key holiday season. [ID:nN2044568] (Reporting by Brad Dorfman and Jessica Wohl in Chicago and Martinne Geller in New York, editing by Gerald E. McCormick, Dave Zimmerman)