Women's apparel retailer Ann Inc. (ANN), the parent company of Ann Taylor and Loft brands, Friday reported a 24 percent increase in profit for the second quarter on higher sales and margins. Both earnings and revenue for the quarter beat analysts' expectations, sending the shares about 15 percent higher in pre-market.
Looking ahead, the company forecast sales for the third quarter below Street view, but raised its sales outlook slightly for fiscal year 2012.
Kay Krill, President and CEO of Ann, said, "Our outstanding results were driven by a seven percent increase in sales, including a comparable sales increase of five percent, a record gross margin rate of 56 percent and a 27 percent increase in operating income."
Gross margin as a percentage of net sales rose to 55.9 percent from 55.0 percent in the year-ago period, reflecting strong client response to the company's products and lower promotional activity than the prior-year quarter at both brands.
Total company's comparable sales for the quarter increased 4.7 percent, on top of an 8.6 percent increase in the year-ago period.
The company noted that at the Ann Taylor brand, sales grew 7 percent from the prior-year period. This includes positive comparable sales in the Ann Taylor stores channel and continued profitable growth in the e-commerce as well as factory outlet channels.
Loft brand sales for the quarter increased 6 percent, echoing strong margin and continued strong comp growth on top of last year's double-digit increase.
Ann's net income for the second quarter was $30.74 million or $0.63 per share, up from $24.79 million or $0.47 per share in the year-ago period.
On average, fourteen analysts polled by Thomson Reuters expected the company to report earnings of $0.51 per share for the quarter. Analysts' estimates typically exclude special items.
Total net sales for the quarter rose 7 percent to $594.87 million from $558.20 million in the year-ago period and beat Wall Street view of $585.61 million.
Looking ahead to the third quarter, Ann forecasts total net sales of $600 million and comparable sales increase in the mid-single digits. Analysts have consensus revenue estimate for the quarter of $605.69 million.
For fiscal 2012, Ann now forecasts total net sales to approach $2.385 billion on comparable sales increase in the mid-single digits. Earlier, the company had expected total net sales for the year of $2.375 billion on comparable sales increase in the mid-single digits.
Analysts expect the company to report revenues of $2.37 billion for the year.
ANN closed Thursday's regular trading session at $28.14. In Friday's pre-market, the stock is up $4.30 or 15.28 percent to $32.44.
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