With a strong third quarter under its belt, Ann Inc. is moving on several fronts — from going international to downsizing Ann Taylor stores — to sustain the momentum.
The specialty retailer is also inserting more fashion items and fewer core and basic items into stores for the upcoming holiday and spring seasons. The Ann Inc. customer “has a very high appetite for fashion and less of an appetite right now for core investment pieces,” Kay Krill, president and chief executive officer, told WWD. “That’s due to the macro-environment, absolutely.”
In addition, Krill said the company will commence international distribution on e-commerce orders early next year and is “actively pursuing” an entry into Canada for late 2012, which would mark the company’s first stores outside the U.S. “We are very anxious to see demand by country. I think both brands have international legs,” Krill said, though she declined to speculate on any countries beyond Canada. English-speaking countries, such as England and Canada, are the priorities, Krill said.
On Friday, Ann Inc. posted a 33.4 percent gain in net income for the third quarter ended Oct. 29 and cited strong acceptance on a range of products, and none of the margin pressure that many other retailers are experiencing due to increased product costs, mainly due to higher cotton prices. Krill said the company foresaw cost issues and made product changes and worked with suppliers well in advance to keep costs down. “We were less promotional overall for the third quarter and a-u-c [average unit cost] was in good shape,” Krill said. In the third quarter, gross margins were up 30 basis points to 57.5 percent.
Ann Inc.’s net rose to $32.3 million, compared with $24.2 million in the year-ago period. Diluted earnings per share were 61 cents in the quarter ended Oct. 29, an increase of 48.8 percent; total sales rose to $564 million, and comparable-store sales increased 5.5 percent.
The company said all channels of selling, with the exception of Ann Taylor stores, were strong last quarter. Ann Taylor stores are generally oversized, and last quarter, didn’t stock enough fashion products but are being corrected for holiday and spring.
However, the company has been downsizing Ann Taylor stores to a 3,500- to 4,200-square-foot prototype, from an average of 6,000 to 7,000 square feet, and said the change boosts productivity without sacrificing volume. “We’ve been getting 50 percent productivity lifts,” said Michael Nicholson, executive vice president and chief financial officer. “Total volume is up with 30 to 40 percent less square footage.”
In addition, the prototype “elevates the overall brand aesthetic,” said Krill. Thirty-five prototypes were operating at the end of the third quarter; 45 more will be added in 2012.
Items infused with color and details — including animal prints, capes and cashmere ponchos — have been bestsellers and that’s where the company is putting greater emphasis for holiday and spring. The Loft division, which accounts for 60 percent of the company’s total business, is doing particularly well with tops, which this quarter represent about 50 percent of Loft’s inventory. Krill cited tops with stripes and color as very strong. So were textured, chunky sweaters and sweaters with fur or lace detail, she added.
For Ann Inc., the fourth quarter represents about 15 percent of annual earnings, which is a lower percentage than many retail peers. Total sales for the year are seen at more than $2.22 billion, an increase of 12 percent from last year.
By brand, net sales of Ann Taylor totaled $229.7 million in the third quarter, compared with net sales of $223.2 million in the third quarter of 2010. Net sales at Loft were $334.3 million, compared with $282.1 million a year ago.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye