For clothing retailers, it's hard enough selling the right
styles at the right time at the right price, all while competing
against a battalion of other businesses.
It's even trickier when you have to do this across a mix of
sales platforms, not only traditional mall-based or stand-alone
stores, but outlet stores and online stores as well.
That's where the industry finds itself in the second decade of
the 21st century. To compete, large apparel retailers need a
multichannel sales approach that connects to a broad range of
One company finding success with this approach isAnn Inc. (
), operator of the Ann Taylor and Loft chains.
Ann specializes in apparel, shoes and accessories for
contemporary women. Loft stores focus on casual wear at
affordable prices, while Ann Taylor stores feature career and
casual fashions at higher prices.
The company has worked hard over the last few years helping
its Ann Taylor and Loft chains recapture market share from rivals
such asGap (
), J.Crew and Banana Republic.
More recently, Ann has implemented a strategy to boost online
sales as well as sales at its Ann Taylor Factory and Loft Outlet
"(Ann) is among the limited number of retailers that are
beginning to speak to the value of shifting into a multi-channel
approach," JPMorgan analyst Brian Tunick noted in a report last
month. "We believe e-commerce and factory outlets will be an
important driver as they are the fastest growing and higher
margin segments, currently representing nearly a quarter of Ann's
In September, Ann launched the first phase of a multichannel
initiative designed to improve sales across all channels.
The company's new e-commerce platform features simpler and
quicker checkouts as well as international shipping options. One
change is that online orders are filled directly from stores for
products that are not available in warehouses.
"We believe the strategy will boost the company's top line
while minimizing costs," Zacks Equity Research noted in a
Although Ann does not break out e-commerce sales in its
quarterly results, the online business has reportedly more than
doubled over the past three years.
Meanwhile, the company has made improvements in other areas as
well, watchers say.
"In addition to remodeling stores into more productive assets,
Ann is in the process of accelerating its outlet expansion,"
Tunick noted. "The focus on the outlet strategy is a clear
positive, as this channel carries higher volumes and
Ann's factory and outlet stores are mainly located in suburban
areas. They are larger in size than the full-priced Ann Taylor
and Loft stores.
Through the first nine months of fiscal 2012, sales at Ann
Taylor Factory stores rose 5% from the prior year to $230.4
million. Same-store sales increased 1.5%. By comparison, Ann
Taylor stores during the same period had a gain of 2% in overall
sales and 0.6% in same-store sales.
Loft Outlet stores posted increases of 20% in overall sales
and 0.4% in same-store sales during the first nine months of the
year. Full-price Loft stores had gains of 9% in overall sales and
8.2% in same-store sales.
Companywide, Ann reported a same-store sales rise of 4.7%
during the first nine months of the year. During the third
quarter, which ended Oct. 27, same-store sales rose 5.5% from a
Full-price Loft stores led the way during Q3 with an 8% gain
in same-store sales. Full-price Ann Taylor stores showed a 5.6%
gain in comps, while Ann Taylor Factory stores reported a 1.7%
increase. Same-store sales at Loft Factory stores declined 3%
during the quarter.
That decline was due to "very controlled inventory and
stronger gross margin rates," analyst Tunick noted.
Overall sales for the third quarter rose 9% from a year
earlier to $612.5 million, topping Wall Street views for $606.1
Earnings gained 38% to 84 cents a share, above estimates for
75 cents. It was the third straight quarter of double-digit EPS
The company opened 25 stores during the quarter and closed
six. It ended the quarter with 981 locations, including 278 Ann
Taylor stores, 101 Ann Taylor Factory stores, 510 Loft stores and
92 Loft Outlet stores.
Ann also entered Canada during the third quarter. It opened
its first store in Toronto in September and added two more in
In a Q3 statement, Chief Executive Kay Krill said the response
in Canada has been "outstanding."
With the move into Canada, Ann is "testing the international
waters for the brand," Tunick noted. "Management sees a top and
bottom line opportunity that may lead to further intentional
Analysts polled by Thomson Reuters expect Ann to report
fourth-quarter earnings of 25 cents a share, up from 10 cents the
The company's stock price got a big shot in the arm back in
August when Ann logged better-than-expected second-quarter
results. Shares rose 20% to a five-year closing high of 34.38 on
Aug. 17. The stock moved as high as 39.78 on Sept. 13. It
currently trades near 33.