(RTTNews) - Women's specialty retailer Ann Taylor Stores Corp. (ANN: News ) reported Friday better-than-expected profit for the third quarter, compared to a loss last year, helped by strong gross margin growth as well as cost saving initiatives, despite a drop in quarterly revenues.

The company projects total sales dollars in the fourth quarter to be slightly below that of the third quarter, while it expects gross margin performance to be considerably stronger than the levels achieved in the fourth quarter last year.

In a statement, president and chief executive officer, Kay Krill said, "Our results for the quarter were a direct result of our strategy to maximize gross margin performance by tightly managing inventories, focusing on full-price selling and controlling costs. I am pleased that our performance also reflects the cumulative benefits of our ongoing restructuring program initiatives."

Ann Taylor added that its emphasis going forward would be to continue the repositioning of the Ann Taylor division and to ensure that LOFT further strengthens its positioning as the destination for casual, feminine and stylish product at great value.

Third Quarter Results

The New York-based company reported net income of $2.07 million or $0.03 per share for the third quarter, compared to a net loss of $13.45 million or $0.24 per share in the prior-year quarter.

The results for the latest quarter include after-tax restructuring and asset impairment charges of $0.17 per share, while the year-ago quarter results included after-tax restructuring and asset impairment charges totaling $0.27 per share.
Excluding the charges, net income for the quarter climbed to $12.0 million or $0.20 per share from year-ago quarter's $1.6 million or $0.03 per share. On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $0.07 per share for the third quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter dropped to $462.41 million from $527.22 million last year, and missed fourteen Wall Street analysts' consensus estimate of $473.85 million. Comparable-store sales decreased 13.7%.

Peer Performance

Among Ann Taylor's peers, Fort Myers, Florida-based Chico's FAS, Inc. (CHS: News ) posted higher profit for the third quarter totaling $22.75 million or 0.13 per share, compared to $2.00 million or $0.01 per share in the year-ago quarter, aided by higher sales and margins. Quarterly net sales rose 13.3% to $446.86 million from $394.24 million in the previous year. Comparable store sales grew 12.8% for the third quarter.

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