AnnTaylor shares jump on raised forecast

By Martinne Geller

NEW YORK (Reuters) - AnnTaylor Stores Corp (ANN.N: Quote, Profile, Research, Stock Buzz) said on Monday that first-quarter earnings were better than expected, due to lower inventories and improvement at its LOFT chain, and the shares of the women's clothing retailer jumped 14 percent to their highest in nearly 5 months.

But the company, which runs the Ann Taylor and Ann Taylor LOFT chains, expressed caution about the rest of the year, leaving its full-year profit forecast unchanged and shelving plans to launch a new store concept targeting baby boomers.

Retailers, and especially those that sell clothing to women, have been hurt in recent quarters because U.S. consumers have cut down on spending as they grapple with soaring food and fuel prices, declining home values and uncertainty about jobs.

Women's clothing chains such as AnnTaylor, Chico's FAS Inc (CHS.N: Quote, Profile, Research, Stock Buzz) and Talbots Inc (TLB.N: Quote, Profile, Research, Stock Buzz) have suffered more acutely as their target customers tend to be less trend-conscious, already have large wardrobes and will often spend discretionary dollars on their families before themselves.

But AnnTaylor surprised Wall Street, saying it expects to report earnings of 45 cents to 47 cents per share, excluding restructuring costs, for the first quarter, which ended on May 3. That compares with a prior forecast of 35 cents to 40 cents.

Based on preliminary figures, AnnTaylor said net sales rose 2 percent to $592 million.

Analysts on average were expecting earnings of 36 cents per share on revenue of $589.7 million, according to Reuters Estimates.

The company, which will report quarterly results on May 22, said its inventory per square foot was down about 15 percent at the end of the quarter. New York-based AnnTaylor also cited better expense management and the impact of its share buyback program for its higher forecast.