AnnTaylor profit surprises, but outlook worries
Women's apparel retailer AnnTaylor Stores Corp
The retailer, which operates its namesake Ann Taylor chain and the more casual, less expensive LOFT stores, said on Friday that same-store sales rose 10 percent in February, and that March was performing even better.
But with Easter falling earlier in April this year than in 2009, Chief Executive Kay Krill said she was cautious about whether the strong momentum so far would continue into next month.
In order for us to be successful in April and continue that momentum, we really need the weather with us and all brands need to continue to fire on all cylinders, which is an outcome we're striving for but it does have some risk as we head into April, Krill said on a conference call.
AnnTaylor forecast first-quarter sales of $445 million, above the average analyst estimate of $443.7 million, according to Thomson Reuters I/B/E/S.
The company said its gross margin rate would be 1 percentage point better than it was a year ago, and that selling, general and administrative expenses would be $240 million.
UBS analyst Roxanne Meyer said AnnTaylor's first-quarter guidance implied earnings of about 12 cents per share, which is below the 16 cents per share analysts were expecting.
Yet Meyer reiterated her buy rating on the shares, citing the company's improved merchandise, effective marketing and signs that its mature female customer is more willing to spend.
Despite there being a lot to like, first-quarter guidance below the Street and the recent stock run could take some air out of AnnTaylor, Meyer said in a research note.
AnnTaylor shares fell 7 cents, to $19.38 in morning trade on the New York Stock Exchange.
AnnTaylor said net income was $41 million, or nil per share, in the fourth quarter, which ended on January 30, compared to a loss of $375.6 million, or $6.66 per share, a year earlier.
Excluding restructuring charges, the company earned 5 cents per share. Analysts, on average, were expecting a loss of 1 cent per share, according to Thomson Reuters I/B/E/S.
Net sales fell about 3 percent to $469.1 million. Same-store sales fell 0.6 percent, as a 2.1 percent increase at LOFT stores helped mitigate a 7.3 percent decline at Ann Taylor.
For the full year, AnnTaylor expects total sales in 2010 to rise, helped by a return to same-store sales growth at both of its chains. It expects total store square footage to decline 3 percent this year, as it plans to close about 72 stores and open 30.
(Reporting by Martinne Geller; Editing by Derek Caney, Dave Zimmerman)
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