Women's specialty retailer AnnTaylor Stores Corp. (ANN), Friday reported a profit for the fourth quarter, compared with a loss last year, mainly due to the absence of significant goodwill and asset impairment charges recorded a year ago. The current-year quarter results were also favored by lower restructuring costs and gross margin improvement. Looking ahead, AnnTaylor provided its sales outlook for the first quarter and fiscal 2010.
The retailer posted fourth-quarter net income of $41 thousand or breakeven per share, compared to a net loss of $375.61 million or $6.66 per share in the same quarter last year.
The company was expecting its fourth-quarter bottom-line performance to be substantially higher than the year-ago fourth quarter and to exceed expectations, helped by higher than expected sales and gross margin rate.
Excluding after-tax restructuring charges of $2.5 million or $0.05 per share, the company reported earnings of $2.5 million or $0.05 per share for the fourth quarter of 2009. This compares with year-ago quarter adjusted net loss of $58.1 million or $1.03 per share. In the year ago quarter, AnnTaylor recorded after-tax goodwill and asset impairment charges of $296.4 million or $5.26 per share and restructuring charges of $21.1 million or $0.37 per share.
On average, 18 analysts polled by Thomson Reuters expected the company to report a loss of $0.01 per share for the quarter. Analysts' forecast typically excludes one-time items.
The company's fourth-quarter net sales were $469.14 million, down from $483.37 million in the fourth quarter of fiscal 2008. Wall Street analysts projected sales of $472.25 million for the quarter. AnnTaylor had projected total sales for the quarter to touch $470 million.
For the preceding third quarter, the New York-based company reported net income of $2.07 million or $0.03 per share on net sales of $462.41 million.
By division, net sales at Ann Taylor declined to $128 million from $146.3 million in the fourth quarter of 2008. At LOFT, net sales were $232.2 million, higher than last year's $231.2 million.
In line with the company's forecast, comparable store sales for the quarter remained essentially flat at negative 0.6% versus the prior year. Comparable store sales declined 7.3% at Ann Taylor and increased 2.1% at LOFT.
Gross margin, as a percentage of sales, grew 1,680 basis points to 52.5%, reflecting improved product at both divisions, a lower level of promotional activity and the success of the company's strategy to conservatively position inventory levels.
During the fourth quarter of 2009, the company did not open any new stores, but closed 12 Ann Taylor stores and 13 LOFT stores. In addition, the company converted ten Ann Taylor stores to LOFT stores during the quarter.
For fiscal 2009, AnnTaylor reported a GAAP net loss of $18.2 million or $0.32 per share, compared with a net loss of $333.9 million or $5.82 per share a year ago. On an adjusted basis, the company reported net income of $17.8 million or $0.32 per share for the full year, up from $2.9 million or $0.05 per share in the previous year.
AnnTaylor's net sales for the year declined to $1.8 billion from $2.2 billion a year ago. Comparable store sales were down 17.8%, with a 30% decline at Ann Taylor and a 12.7% decline at LOFT.
Street analysts estimated full-year earnings of $0.21 per share on net sales of $1.83 billion.
During fiscal 2009, the company opened nine LOFT stores, one Ann Taylor Factory store and four LOFT Outlet stores, and closed 18 Ann Taylor stores and 24 LOFT stores. In addition, the company converted 11 Ann Taylor stores to LOFT.
At the end of fiscal year 2009, the company's total store count was 907, comprised of 291 Ann Taylor stores, 506 LOFT stores, 92 Ann Taylor Factory stores and 18 LOFT Outlet stores.
AnnTaylor stated that its Strategic Restructuring Program, which was launched in January 2008, is expected to generate total ongoing annualized savings of approximately $125 million over the 2008-2010 period. In fiscal year 2008, the company generated restructuring savings of about $40 million. An incremental $65 million were generated in fiscal 2009 and the remainder is expected to be realized in fiscal 2010.
AnnTaylor also expects to close approximately 72 stores in fiscal 2010, for a total of approximately 174 store closures under the 3-year program. Of these, approximately half are expected to be Ann Taylor stores and half are expected to be LOFT stores.
Amongst AnnTaylor's rivals, Liz Claiborne Inc. (LIZ) has reported a much narrower loss for the fourth quarter, despite a decline in revenues, reflecting lower one-time charges. Prior-year quarter loss included hefty goodwill impairment charges. Net loss attributable to the company was $41.70 million or $0.45 per share, compared to a loss of $828.90 million or $8.85 per share reported last year. Net sales dropped 14.5% to $778.81 million from $911.17 million last year.
Another peer, Talbots Inc. (TLB) is set to announce its fourth-quarter results on April 13. Analysts are of the view that the company will earn $0.01 per share for the quarter on sales of $314.25 million.
Talbots has projected about 4% decline in its total sales from continuing operations for the fourth quarter, better than its previously announced range of down 6% to 8%, driven by positive full price selling in the quarter.
Going ahead, AnnTaylor expects first-quarter total net sales of approximately $445 million while analysts expect sales of $443.72 million. The company's gross margin rate performance is expected to be approximately 100 basis points better than the levels achieved in the first quarter of 2009.
"We have strong momentum into the first quarter, with both brands achieving comparable store sales increases of approximately 10% in February," said, Kay Krill, AnnTaylor's President and Chief Executive Officer.
Meanwhile, a report released by the Commerce Department today showed that retail sales rose by 0.3% in February following a downwardly revised 0.1% increase in January. The sales growth came as a surprise to economists, who had expected sales to edge down by 0.2%.
For fiscal 2010, AnnTaylor now foresees total net sales to improve over the levels achieved in 2009. Analysts expect the company to report revenues of $1.84 billion for fiscal 2010.
The company also anticipates a return to positive comparable store sales at both brands in each of the fiscal quarters of 2010, as a result of more compelling product assortments, strategic marketing initiatives and a disciplined approach to inventory management.
ANN is trading at $19.30, down $0.15, on a volume of 2.57 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.