(RTTNews) - Women's specialty retailer Ann Taylor Stores Corp. (ANN: News ) Wednesday posted a loss for the first quarter compared to a profit last year, hurt by a 28% drop in quarterly sales. However, the results were better-than-expected reflecting strong gross margins and significant expense savings amid the economic downturn. Loss per share for the latest quarter came in narrower than analysts' expectations by nine cents.

In s statement, president and chief executive officer, Kay Krill said, "The Company's performance in the quarter reflected a gross margin rate that, despite the difficult retail and consumer environment, exceeded the prior year and was dramatically higher than the gross margin rate we reported in the fourth quarter of 2008."

The New York-based company reported a net loss of $2.31 million or $0.04 per share for the first quarter, compared to net income of $25.90 million or $0.43 per share in the year-ago quarter.

Excluding restructuring charges, net loss for the quarter was $2.5 million or $0.04 per share, compared to the year-ago quarter's income of $28.2 million or $0.47 per share.

On average, 16 analysts polled by Thomson Reuters expected the company to report a loss of $0.13 per share for the first quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter dropped 28% to $426.75 million from the previous year's sales of $591.66 million, and missed thirteen Wall Street analysts' consensus estimate of $454.66 million. Comparable-store sales decreased 30.7%.

On a divisional basis, net sales at the company's namesake stores, where professional working women represent a large part of its client base, were $107.4 million, sharply down from last year's sales of $197.6 million, and sales at LOFT declined to $223.2 million from $295.0 million last year.
During the first quarter, comparable-store sales at namesake stores dropped 42.7%, and comparable-store sales at LOFT declined 24.2%.

Operating loss for the first quarter was $2.72 million, compared to operating income of $41.23 million in the prior-year quarter. Excluding restructuring charges, operating loss was $2.5 million, compared to operating income of $44.9 million last year.

Gross margin for the quarter declined to $236.86 million from $314.93 million in the year-ago quarter, while gross margin percentage increased 230 basis points to 55.5% from the year-ago quarter's 53.2%.

Selling, general and administrative expenses were $239.39 million, down 11% from $269.97 million in the year-ago quarter. Restructuring charges for the quarter dropped to $0.19 million from $3.72 million in the same quarter last year.

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