By Aditi Shrivastava and Shailaja Sharma
March 14 Women's apparel retailer Ann Inc's
quarterly profit topped analysts' estimates again as
shoppers snapped up the trendy merchandise sold at its Loft
chain, sending its shares up more than 7 percent.
The parent of the Ann Taylor and Loft brands also said it
would cut 100 jobs, or about 5 percent of its full-time
Ann Inc has handily beaten quarterly profit estimates in the
last two years, making it one of the few retailers that have
weathered a protracted weakness in U.S. consumer spending.
The company, however, warned that current-quarter sales
could miss estimates.
"We are approaching the first-quarter outlook with caution
given the extreme weather conditions, the heightened promotional
environment and soft traffic," Chief Executive Kay Krill said on
a post-earnings conference call with analysts.
But analysts played down the warning, saying they remained
optimistic about the company's prospects.
"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.
Last year, both Ann Taylor and Loft were forced to offer
more promotions as insipid clothing lines failed to excite
shoppers. The company has since turned things around with
Earlier this week, apparel retailers ranging from Express
Inc to Urban Outfitters Inc warned that
results in the current quarter would be hurt by choppy sales
trends at malls and severe winter weather.
Ann Inc said total company comparable sales rose 2.9 percent
in the fourth quarter. Comparable sales at the company's Loft
stores, which sells trendier merchandise, rose 5.7 percent.
Comparable sales at the Ann Taylor brand fell 1.1 percent,
primarily due to weakness at its factory outlets. The brand
caters to a slightly older clientele and is known for its
traditional pearls-and-classics fashions.
However, analysts said Ann Taylor continued to gain share in
the wear-to-work segment.
Oppenheimer & Co analyst Anna Andreeva said some of this
market share gains was coming from departmental stores like J.
Ann's fourth-quarter net income rose to $4.7 million, or 10
cents per share, in the fourth quarter ended Feb. 1, from $2.4
million, or 5 cents per share, a year earlier.
Analysts on average had expected a profit of 7 cents per
share, according to Thomson Reuters I/B/E/S.
Gross margins rose to 49.3 percent from 49.1 percent a year
Total net sales rose 2.6 percent to $623.3 million, slightly
below the average analyst estimate of $623.8 million.
The company said it expects first-quarter total net sales to
approach $600.0 million. Analysts on average expect sales of
As of January 2012, Ann had about 19,900 employees, of which
about 2,000 were full-time salaried employees.
Ann said the realignment is expected to result in ongoing
annualized pre-tax operating savings of about $25 million, of
which about $15 million is expected to be realized in 2014.
The company's shares were up 6.5 percent at $37.21 in midday