) gained momentum and soared to a record 52-week high of $43.61
on Friday, March 21, after Golden Gate Capital Corp. revealed
that it has bought a 9.5% stake in this women's apparel and
accessories retailer. Eventually, the stock closed trade at
$42.05, up 13% from the previous day's session.
, the move has made Golden Gate the largest shareholder of ANN,
) that has a 9.3% stake in the company. The private equity firm,
Golden Gate believes that the owner of Ann Taylor and LOFT
clothing brands is highly undervalued in spite of the company
being managed efficiently.
For the past one year, various private equity firms have
acquired stakes in retail companies amid the recovering U.S.
economy and improving job environment. Last month, Vintage
Capital, a private equity firm, made an offer of $30.50 per share
or $2.3 billion to acquire the leading rent-to-own retailer,
). Last year, the Los Angeles based teen apparel retailer, Hot
Topic Inc. was taken over by NY-based private equity firm,
Sycamore Partners for a total sum of approximately $600
In its letter to ANN's management, Golden Gate revealed its
intention of working with the retailer to enhance shareholders'
value. ANN, which had posted record earnings for two consecutive
years and the four straight year of improving comparable-store
sales, welcomed the move.
Last week, ANN, which competes with
American Apparel, Inc.
), came out with its fourth-quarter fiscal 2013 results, wherein
earnings of 10 cents per share increased twofold from the
year-ago quarter and surpassed the Zacks Consensus Estimate of 7
cents. The stock has gained 28.7% since the company's preliminary
earnings announcement on Feb 6.
Buoyed by better-than-expected fourth-quarter results, this
Zacks Rank #3 (Hold) stock provided an impressive guidance for
fiscal 2014. It anticipates net sales of $2.6 billion, with comps
rising in the low single digits range. Moreover, gross margin is
expected to be around 54%. Further, the company projects to spend
$120 million as capital expenditure.
Management believes that the company is well positioned for
sustained growth in the future, given that both of its brands
will begin the spring season with solid product offerings. ANN
also plans to further its international operations as it intends
to enhance its brands in Canada and introduce its first LOFT
store in Mexico at the end of 2014. These initiatives, along with
its integrated stores and e-Commerce structure, are expected to
push ANN to a new height in the omni-channel world.
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