* 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
NEW YORK, Feb 2 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
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
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
"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
(Reporting by Brad Dorfman and Jessica Wohl in Chicago and
Martinne Geller in New York, editing by Gerald E. McCormick,