) posted strong financial results for the third quarter of fiscal
2013, primarily driven by robust top-line performance along with
effective cost management and lower share counts. The upscale
segment retailer's earnings of 89 cents per share for the quarter
surged 17.1% from the prior-year quarter's adjusted earnings of
76 cents and beat the Zacks Consensus Estimate of 87 cents. The
prior-year quarter does not include a benefit of 8 cents per
share related to the recognition of gift card and merchandise
During the quarter, ANN's net sales grew approximately 7.3% to
$657.5 million from $612.5 million in the year-ago quarter. In
terms of brands, the company's ANN Taylor brand generated total
sales of $249.2 million (37.9% of total sales), while its LOFT
brand made a contribution of $408.4 million (62.1% of total
sales). Moreover, quarterly revenue strides ahead of the Zacks
Consensus Estimate of $654.0 million.
The year-over-year growth was primarily driven by a 3.7% rise
in same-store sales. In terms of brands, same-store sales
improved 0.6% at ANN Taylor and 5.6% at LOFT.
ANN's gross profit recorded growth of 3.3% year over year to
$366.2 million. However, gross margin contracted 220 basis points
(bps) to 55.7%. The year-over-year decline in gross margin was
primarily due to increased promotional expenses.
Selling, general and administrative (SG&A) expenses dipped
190 bps to 45.0% of net sales due to cost savings and increased
net sales, partially offset by higher store expansion costs.
Accordingly, operating profit increased to $70.4 million from
$66.9 million in the year-ago quarter. However, operating margin
contracted 20 bps to 10.7% primarily due to lower gross margin
partially offset by improved SG&A expenses as a percentage of
ANN exited the quarter with cash of approximately $118.7
million compared with $166.5 million in the year-ago period.
Total shareholders' equity came in at $449.3 million compared
with $448.4 million in the year-ago period.
The company reported an increase of 8% in its total inventory
per square, at the end of quarter. The year-over-year increase
was primarily due to rise in inventory levels at the company's
ANN Taylor, LOFT, and factory outlets of 1%, 14% and 10%,
ANN operates a nationwide chain of fashionable clothing for
women. During the quarter, the company opened 20 stores,
consisting of 1 ANN Taylor store, 1 ANN Taylor Factory store, 12
LOFT stores and 6 LOFT Outlet stores. As of Nov 2, 2013, the
company operated 276 ANN Taylor, 106 ANN Taylor Factory, 537
LOFT, and 108 LOFT Outlet stores across 47 states, the District
of Columbia, Puerto Rico and Canada.
Moving forward, ANN now targets total sales of $2,510 million
for fiscal 2013, assuming low-to-mid-single digit growth in
comparable store sales. At the end of second quarter, the company
had estimated to generate $2,515 million of sales in fiscal 2013.
Presently, the company expects to achieve a gross margin rate of
53.9% for fiscal 2013, compared with 54.3% projected earlier.
The company also stated that it now estimates capital
expenditure of $155 million for fiscal 2013, down from the
previous guidance of $160 million. Moreover, ANN intends to open
nearly 66 new stores and shut down approximately 30 stores during
For the fourth quarter of fiscal 2013, the company expects
sales of $640 million, assuming mid-single-digit growth in
comparable store sales. Moreover, gross margin is expected to
touch 49.5% while selling, general and administrative expenses
are pegged at $305 million.
Other Stocks Worth Considering
ANN currently carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the same sector include
Fossil Group, Inc.
Finish Line Inc.
). All these stocks hold a Zacks Rank #2 (Buy).
ANN INC (ANN): Free Stock Analysis Report
DSW INC CL-A (DSW): Free Stock Analysis
FINISH LINE-CLA (FINL): Free Stock Analysis
FOSSIL GRP INC (FOSL): Free Stock Analysis
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