Driven by strong top-line performance along with improved
margins, the upscale segment retailer,
) earnings of 63 cents per share for the second quarter of fiscal
2012 surged over 34% from the prior-year quarter's earnings of 47
cents. Moreover, quarterly earnings beat the Zacks Consensus
Estimate of 51 cents per share.
During the quarter, Ann's net sales grew approximately 6.6% to
$594.9 million from $558.2 million in the year-ago quarter. In
terms of brands, the company's Ann Taylor brand generated total
sales of $233.3 million, while its LOFT brand made a contribution
of $361.6 million. Moreover, quarterly revenue strides ahead of the
Zacks Consensus Estimate of $586 million.
The year-over-year growth was primarily driven by a 4.7% rise in
same-store sales. In terms of brands, same-store sales improved
5.6% at Ann Taylor and 4.2% at LOFT.
Ann's gross profit recorded a growth of 8.3% year over year to
$332.4 million, while gross margin expanded 90 basis points (bps)
and touched a record high of 55.9%. The growth was mainly
attributable to better product execution along with lower
Selling, general and administrative expenses dipped 50 basis
points to 47% of net sales due to cost savings and increased net
sales, partially masked by higher store expansion costs.
Accordingly, Ann's operating profit climbed to $52.9 million from
$41.7 million in the year-ago quarter. Consequently, operating
margin expanded 140 basis points to 8.9% compared with the
prior-period margin of 7.5%.
Ann exited the quarter with cash and cash equivalents of
approximately $132.7 million compared with $145.2 million in the
year-ago quarter. Total shareholders' equity came in at $368.2
million compared with $393.9 million in the year-ago period.
Further, during the second quarter Ann deployed approximately
$40 million to repurchase about 1.6 million shares of its common
The company reported an increase of 2% in its total inventory
per square foot excluding e-commerce, during the quarter. The
year-over-year increase was primarily due to an 11% and 2% rise in
inventory level at the company's Ann Taylor and LOFT stores,
respectively, partially offset by a 9% decline at the company's
Ann operates a nationwide chain of fashionable clothing for
women. During the quarter, the company opened 17 stores, consisting
of 3 Ann Taylor stores, 1 Ann Taylor Factory store, 7 LOFT stores,
6 LOFT Outlet stores while closed 2 LOFT stores. As of July 28,
2012, the company operated 962 Ann Taylor, LOFT, Ann Taylor
Factory, and LOFT Outlet stores across 46 states, the District of
Columbia and Puerto Rico.
Moving forward, Ann now targets total sales of $2.385 billion
for fiscal 2012, assuming an increase of mid-single digit growth in
comparable store sales. At the end of first quarter, the company
had estimated to generate $2.375 billion of sales in fiscal 2012.
Presently, the company expects to achieve a gross margin rate of
55% in fiscal 2012.
The company also stated that it now estimates capital
expenditure of $160 million for fiscal 2012, up from the previous
guidance of $150 million. Moreover, Ann intends to open nearly 65
new stores and shut down approximately 30 stores during the
For the third quarter of fiscal 2012, the company expects sales
of $600 million, assuming mid-single-digit growth in comparable
store sales. Moreover, gross margin is expected to touch 58% while
selling, general and administrative expenses are pegged at $290
The company is in direct competition with
Chico's FAS Inc.
). Ann Taylor currently retains a Zacks #1 Rank implying a
short-term Strong Buy rating. However, we are maintaining a long
term 'Neutral' recommendation on the stock.
Headquartered in New York, New York, Ann operates as a national
retailer of upscale women's clothing. Its stores offer a full range
of apparel and accessories under the names Ann Taylor, Ann Taylor
Studio, ATdenim, Ann Taylor Petites and LOFT. It serves customers
through its traditional retail stores, online stores -
anntaylor.com and LOFTonline.com, as well as via phone. The company
targets college-educated women between the ages of 25 and 55 who
are employed in professional and managerial positions.
ANN INC (ANN): Free Stock Analysis Report
CHICOS FAS INC (CHS): Free Stock Analysis
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