ANN Q4 Profit Tops View, To Cut 100 Jobs In Realignment

(RTTNews) - ANN Inc. (ANN), the parent company of women's specialty retail fashion brands Ann Taylor and LOFT, Friday reported increased profit for the fourth quarter that topped estimates. Separately, the company announced a strategic realignment of its organization to support an integrated stores/ecommerce structure, which includes elimination of around 100 positions from its corporate workforce.

Kay Krill, CEO, said, "For the fourth quarter, net sales, comparable sales and gross margin rate all showed improvement from the fourth quarter of 2012. However, as previously reported, soft traffic and tepid consumer spending across the industry negatively impacted us, particularly in factory outlet centers and in those regions that were negatively affected by extreme winter weather.''

Net income for the quarter climbed to $4.68 million from $2.37 million in the previous year. Earnings per share advanced to $0.10 from $0.05 in the fourth quarter of 2012.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $0.07 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales improved to $623.26 million from $607.68 million in the fourth quarter of fiscal 2012. Analysts estimated revenues of $623.82 million for the quarter.

By brand, net sales for the Ann Taylor brand fell slightly to $246.2 million while it improved at the LOFT brand to $377.1 million.

Total company comparable sales increased 2.9 percent compared to a decrease of 0.7 percent last year. At Ann Taylor, comparable sales declined 1.1 percent and at LOFT, it increased 5.7 percent.

Gross margin improved 20 basis points to 49.3 percent, primarily reflecting effective planned promotional activity at both Ann Taylor and LOFT, partially offset by a higher level of promotional activity in the factory/outlet channel.

During the quarter, the company opened 12 new stores, comprised of two Ann Taylor stores, six LOFT stores, two Ann Taylor Factory stores and two LOFT Outlet stores. The retailer closed 10 Ann Taylor stores and four LOFT stores during the period.

For the fiscal first quarter of 2014, the company expects total net sales to approach $600 million, reflecting comparable sales that are approximately flat with the previous year. Analysts expect the company to report revenues of $613.33 million for the first-quarter.

"Looking ahead to 2014, ANN INC. is well-positioned for continued profitable growth, with both brands entering the Spring season with strong product offerings featuring great fashion, versatility and value for our clients,'' Krill said.

The firm currently expects fiscal 2014 total net sales to be $2.615 billion, reflecting a comparable sales increase in the low-single digits. Wall Street looks for revenues of $2.64 billion for fiscal 2014.

Separately, as part of a realignment, the retailer named Gary Muto President, ANN INC. Brands, reporting to Kay Krill. He will primarily focus on design, merchandising and marketing for all channels of the Ann Taylor and LOFT brands.

The realignment is expected to result in ongoing annualized pre-tax operating savings of around $25 million, of which about $15 million is expected to be realized in fiscal 2014.

As a result of the strategic realignment, the company has streamlined its operations, eliminating about 100 positions from its corporate workforce.

The company expects to record a pre-tax restructuring charge of $15 million in connection with the realignment, majority of which is expected to be incurred in fiscal first quarter of 2014.

ANN closed down around 0.1 percent on Thursday at $34.87.