NEW YORK — Ann Taylor Stores didn’t set the fashion world on fire during the second quarter, but it managed a 16.3 percent profit increase anyway.
“Ann Taylor’s positive comparable-store sales for the quarter were driven by strategically managed promotions that helped optimize selling of product that continued to border on being too safe, lacking color and sophistication,” AT chairman J. Patrick Spainhour said in a statement.
On the other hand, he noted, the success of the Loft division “continued to be a full-price story fueled by momentum coming out of March, driven by fashion, color, femininity and novelty product, to provide our clients with unequaled value.”
Buoyed by comparable-store sales gains in both divisions, the New York-based firm, for the three months ended Aug. 2, recorded net income of $21.2 million, or 45 cents a diluted share, at the upper end of its previously raised forecast. Last year, the retailer reported earnings of $18.2 million, or 39 cents.
For the quarter, sales were $390.2 million, up 13.7 percent from $343.1 million for the same period last year. AT division sales were $216 million and those at Loft were $140 million. Comp-store sales were up 5.3 percent, rising 4.9 percent at AT and 5.7 percent at Loft.
As reported, in posting a better-than-expected overall comp increase of 7.6 percent in July, Spainhour raised AT’s second-quarter guidance to 44 to 45 cents from 39 to 41 cents.
Jerome Jessup, senior executive vice president for the AT division, said on a conference call, “Our clients responded well to marketing and we ended the quarter with a clean presentation.” He noted suits and dresses performed well and sweaters and knits improved.
Dana Cohen, a retail analyst with Banc of America Securities, wrote in a research note, “While the impact of Jessup will not be felt at the Ann division until holiday at the earliest, we were encouraged with the directional improvement of fall. We saw an uptick in quality, tailoring and sophistication, although sizzle is still needed.”
Jessup joined AT in April from Gap Inc., where he was executive vice president of product development and design for Gap brand.Although AT’s financial results came out after the market’s close, investors anticipated a solid performance, sending shares up to a new 52-week high of $33.31 in intraday trading. For the day, shares added 13 cents, or 0.4 percent, to close at $33 in New York Stock Exchange trading.
The company projected third- and fourth-quarter earnings to range from 57 to 61 cents and 41 to 43 cents, respectively. Full-year earnings are now in the range of $1.82 to $1.88. In addition, AT said it expects August, September and October comps to be up from 3 to 5 percent at both divisions.
For the first half, income was flat at $39.1 million, or 84 cents a diluted share. Sales rose 7.8 percent to $742.2 million from $688.5 million.
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