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Slow Sales at Ann Taylor Cause Rating Downgrade

NEW YORK -- Shares of Ann Taylor Stores Corp. remained under pressure Thursday after two investment firms downgraded their ratings Wednesday due to slower sales in early September.<BR><BR>The stock slid 1/4 to 37 1/4 on the New York Stock Exchange...

NEW YORK — Shares of Ann Taylor Stores Corp. remained under pressure Thursday after two investment firms downgraded their ratings Wednesday due to slower sales in early September.

The stock slid 1/4 to 37 1/4 on the New York Stock Exchange Thursday after dropping 4 1/4 in heavy trading Wednesday.

J.P. Morgan Securities downgraded Ann Taylor’s stock to “market performer” from “buy,” and Morgan Stanley also cut its rating on Ann Taylor to “hold” from “buy”.

Janet J. Mangano, an analyst at Burnham Securities, said same-store sales gains slowed in early September, running in the mid-single digit range versus an 11.2 percent same-store gain in August and a 17 percent same-store increase in July. Mangano said this largely reflects tough comparisons against last September, when same-store sales were 10.1 percent.

Mangano, who kept her “buy” rating on the stock, trimmed her estimate to the low end of Ann Taylor’s targeted 32-cents-to-35 cents range.

She added, however, that “full-priced selling continues at a good pace” and total sales should come in higher than originally projected due to new store openings.

Analysts still expect Ann Taylor to net $1.45 for the full year, compared with 66 cents a year ago.

Edward F. Johnson, of Johnson Redbook Service, noted that the stock had been strong this year, recently reaching an all-time high of 44 1/8, and was susceptible to some profit taking.

Paul E. Francis, executive vice president of finance at Ann Taylor, said the company continues to focus on business “which is strong and does not pay attention to day-to-day movements in stock performance.” He pointed out that the stock started 1994 at 24 3/4.

— Fairchild News Service