Ann Taylor Stores Corp. (ANN) recently posted fiscal 2009 fourth quarter results. The company swung to an adjusted earnings of 5 cents per share from an adjusted loss of $1.03 in the year-ago period. The result also came in ahead of the Zacks Consensus Estimate for a penny loss. The better-than-expected performance was primarily driven by improved merchandise mix, lower markdowns and prudent inventory management.
Ann Taylor’s net sales during the quarter decreased 2.9% to $469.1 million, compared to $483.4 million in the year-ago quarter. The reduction was primarily caused by the closure of 42 stores in fiscal 2009 coupled with a marginal 0.6% decline in same-store sales. In terms of segments, same-store sales dipped by 7.3% at Ann Taylor stores, while it grew by 2.1% at LOFT stores.
Ann Taylor posted a strong 42.8% year-over-year growth in gross profit to $246.4 million, while gross margin surged by 16.8% to 52.5%. The impressive growth was mainly driven by better merchandise mix, reduced promotional activities and prudent inventory management.
Selling, general and administrative expenses declined 8.9% to $241.6 million due to stringent management initiatives to control costs. Consequently, Ann Taylor recorded an operating income of $1.2 million during the quarter, compared to an operating loss of $439.1 million in the year-ago quarter, which included a combined goodwill and asset impairment charge of $313.4 million.
Ann Taylor ended the quarter with cash and cash equivalents of $204.5 million, compared to $112.3 million in the year-ago period. During the quarter, the company generated $83 million of operating cash flow and deployed $9.2 million towards capital expenditure.
Looking ahead, Ann Taylor anticipates revenues of $445 million in the first quarter of fiscal 2010, while gross margin is expected to improve by 100 basis points year over year. For fiscal 2010, Ann Taylor expects sales to improve over 2009 on the back of positive same-store sales. The company also plans to close 72 stores in the fiscal and is targeting savings of $20 million from ongoing restructuring initiatives.
Meanwhile, the Zacks Consensus Estimate on the company’s earnings for the first quarter of fiscal 2010 has edged up a penny in just the past week to 16 cents per share as 6 out of 15 covering analysts raised projections while 2 revised theirs downward.
The Zacks Consensus Estimate on Ann Taylor’s earnings for the full fiscal also moved up by 3 cents over the past week to 73 cents per share as 6 out of 17 covering analysts lifted expectations while one analyst moved in the opposite direction.
Ann Taylor operates a nationwide chain of fashionable clothing stores for women. As of Jan 30, 2010, the company operated 907 Ann Taylor, LOFT, Ann Taylor Factory, and LOFT Outlet stores in 46 states, the District of Columbia and Puerto Rico.
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