AnnTaylor sees weak holiday season

CHICAGO (Reuters) - AnnTaylor Stores Corp declined to give an earnings forecast for the holiday quarter and expects same-store sales to fall about 25 percent during the period as its shoppers cut back on purchases, sending its shares down to their lowest level in more than a decade.

The women's clothing retailer reported a quarterly loss on Friday as the financial crisis exacerbated already weak sales trends.

The company expects consumer spending to remain soft through the current fourth quarter and said it faces a competitive market with heavy discounting. AnnTaylor said its gross margins will suffer because it did not expect the "magnitude of the current softness."

AnnTaylor bought inventory expecting a mid-single-digit decline in fourth-quarter sales at stores open at least a year. It now expects those sales to fall about 25 percent, said Chief Financial Officer Michael Nicholson on a conference call.

Shares of AnnTaylor fell more than 13 percent to their lowest level in more than 10 years.

Companies that cater to women professionals, such as AnnTaylor, Talbots Inc and Chico's FAS Inc, have struggled for more than a year due to a U.S. economic slowdown and often performed worse than other retailers.

Many professional women cut spending on themselves before sacrificing purchases for their families, while a lack of compelling fashions kept others away.

These trends got worse once the financial crisis erupted in September, stoking widespread fears of a global recession.

AnnTaylor's shoppers are buying fewer suits and dressy items and are likely to cut back on buying gifts, Chief Executive Kay Krill said during the conference call.

The company is phasing out the maternity line at its LOFT stores as of next spring and is not focusing on beauty products at its Ann Taylor stores, where it is going to emphasize a core assortment of clothing, Krill said.

AnnTaylor said it had "significantly scaled back" its capital spending for next year as it tries to preserve cash, adding that it has generates more than enough cash to run its business. The company said it had a strong, debt-free balance sheet and expected to maintain a solid cash position in the fourth quarter and next fiscal year.

Nicholson said AnnTaylor expects to end the year with $75 million to $100 million in cash.

SALES FALL

The owner of the Ann Taylor and Ann Taylor LOFT chains reported a loss of $13.45 million, or 24 cents per share, in the third quarter ended November 1, compared with a year-earlier profit of $40.76 million, or 66 cents per share.

Excluding restructuring charges, it said earnings per share were break-even in the latest quarter, in line with analysts' average forecast, according to Reuters Estimates.

Earlier this month, AnnTaylor said its third-quarter sales trends were disappointing and that profit excluding items would be break-even. It also said it would expand the scope of a restructuring it announced in January that included closing 117 stores and cutting up to 13 percent of headquarters staff.

Quarterly sales fell to $527.2 million from $600.9 million a year ago. Sales at stores open at least a year, an important retail gauge known as same-store sales, fell 19.4 percent in the quarter.

Sales fell at both Ann Taylor and LOFT. Same-store sales fell 24.8 percent at Ann Taylor and 15.4 percent at LOFT.

Shares of AnnTaylor were down 70 cents at $4.65 after falling as low as $4.62.

(Reporting by Nicole Maestri in New York and Jessica Wohl in Chicago; editing by Dave Zimmerman)