UPDATE 3-AnnTaylor loss worse than expected; shares plunge

* Q4 loss $1.03/shr vs Wall St view loss $0.55

* Will now close 163 stores vs plan for 117 closures

* Draws down $125 mln of $250 mln credit facility

* Shares fall 28 pct (Adds executive comments, analyst; adds NEW YORK to dateline)

By Martinne Geller and Jessica Wohl

NEW YORK/CHICAGO, March 6 (Reuters) - AnnTaylor Stores Corp (ANN.N) posted a loss almost twice as big as Wall Street expected on Friday, hurt by aggressive markdowns, and plans to would close 46 more stores as professional women buy less of its work-friendly clothing in the recession.

The company, whose shares plunged nearly 26 percent in morning trade, said on Thursday it had drawn down $125 million of its $250 million revolving credit facility.

UBS analyst Roxanne Meyer said AnnTaylor had some of the deepest promotions in shopping malls during the latest holiday season, which proved to be the retail industry's toughest in nearly four decades. Meyer cited discounts of up to 70 percent off by early December and new spring merchandise marked down as much as 60 percent weeks after hitting racks in January.

Meyer expects no significant improvement in the company's merchandise assortments until the fall, and therefore views the first half of 2009 as "all about defense" for AnnTaylor.

The operator of the Ann Taylor and Ann Taylor LOFT chains, which has been restructuring for more than a year, called the most recent quarter its "earnings trough."

For the fourth quarter ended Jan. 31, it posted a loss of $58.1 million, or $1.03 per share, before impairments and restructuring charges, compared with a year-earlier profit of $11.5 million, or 19 cents per share. Analysts had expected a loss of 55 cents per share, according to Reuters Estimates.

Including items, the loss widened to $376 million, or $6.66 per share, from $6.7 million, or 11 cents per share.

Sales fell to $483.4 million from $600.8 million, while sales at stores open at least a year plunged 24.5 percent.

Same-store sales fell 29.4 percent at the Ann Taylor chain and 21.9 percent at the lower-priced LOFT chain.

While the company did not give a specific earnings outlook, it expects sales to be under significant pressure this year, with some improvement in the second half.

SUIT SALES HURT BY UNEMPLOYMENT