| NEW YORK
NEW YORK AnnTaylor Stores Corp ANN.N 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) and Talbots Inc TLB.N 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.
Sales at stores open at least a year, or same-store sales, fell 4.3 percent in the first quarter, compared with analysts' average forecast for a decline of 2.8 percent, according to Thomson Reuters data.
An 11.5 percent decline at its namesake Ann Taylor stores offset a 0.7 percent increase at LOFT stores, whose clothes are more casual and less expensive.
Oppenheimer analyst Roxanne Meyer called the performance at LOFT a relative highlight in a tough environment.
"While Loft is up against very easy comparisons in the first half and not putting up big numbers, it is nonetheless doing well relative to many of its peers," Meyer said, pointing to same-store sales declines by White House/Black Market and Banana Republic, which are owned by Chico's and Gap Inc (GPS.N), respectively.
Meyer said there is still room for improvement at LOFT, but she thinks management's key focus in the second half of the year will be to turn around the core Ann Taylor business.
Standard & Poor's retail analyst Pearl Wang said she viewed the company's expense and inventory control in this difficult macroeconomic environment as positive, but continues to be cautious on its business in the near term, based on her expectation consumer spending will remain challenged.
AnnTaylor did not change its full-year forecast for earnings, excluding special items, of $1.80 to $1.90 per share.
"We remain cautious about our outlook for the balance of the year, given the highly volatile and uncertain nature of the current economic environment," said Chief Executive Officer Kay Krill.
Krill said the company has decided not to pursue its new store concept at the present time, but is moving forward aggressively with the launch of LOFT outlet stores this summer.
AnnTaylor announced last May it planned to launch a new store concept in the autumn of 2008, but declined to give details. In August, it said the new concept would target baby boomers, most of whom are in their 40s and 50s. In January the company said it would delay the launch until next year, given the macroeconomic environment and retail slowdown.
AnnTaylor shares were up $3.48 at $28.03 in afternoon trading on the New York Stock Exchange.
(Reporting by Martinne Geller; editing by John Wallace and Andre Grenon)