NEW YORK — Updated classic career merchandise brought Ann Taylor’s loyal customers back to its stores this spring as the women’s specialty retailer said its second-quarter income nearly tripled.
Meanwhile, the company made two executive appointments. Veteran fashion designer Mark Eisen will be joining Aug. 19 as senior vice president of design for the AT division, and Bud Wagner, formerly of Cap Gemini/Ernst & Young, was named to the post of senior vice president of information systems, replacing Wolly Morin.
"In 2002, Ann Taylor’s priority continued to return the product to the brand," J. Patrick Spainhour, Ann Taylor’s chairman, said on an afternoon conference call.
The New York-based firm, which operates 555 stores, said income shot up 184.5 percent to $18.2 million, or 39 cents a diluted share, a penny better than what AT said it expected when it raised guidance last week. It is also a far cry from income of $6.4 million, or 15 cents, in the comparable quarter a year ago.
Sales grew 10.6 percent to $343.1 million in the quarter from $310.3 million, but were down 0.2 percent on a same-store sales basis, comprised of an increase of 0.3 percent at AT versus a 17.2 percent decrease last year and down 1.5 percent at Loft stores, compared to a 1.5 percent increase last year.
Spainhour said, "Gross margin on both full-price and non-full-price sales was strong throughout the season at both of our retail concepts, exceeding expectations.
"The quality of our full-price merchandise is a strong indication our client is accepting the product," he added. "The strong earnings came through improved inventory management and better merchandise."
To build sales, Kim Roy, president of the AT division, said she is adding new products to the collection to diversify fabrics beyond triacetate and include investments in men’s wear styles and feminine tops, expanding its silhouette and skirt suits.
Investors are also high on AT. Since reaching its 52-week low of $14.06 on Oct. 1, AT’s stock price has doubled, closing Wednesday up 3.2 percent, or 89 cents, Wednesday to $28.40 on the New York Stock Exchange.In a reiteration of a previous "buy" rating, Jennifer Black, analyst at Wells Fargo, said, "This company has strong fundamentals and is now clear on what its target market wants. In addition, it offers classic apparel, which has a propensity to be more desirable to an economy with dollar-conscious consumers."
As reported, based on strong gross margins in the first half, AT upped its third-quarter EPS target to range between 50 and 51 cents from original expectations of 45 to 46 cents. Comps in the third quarter are expected to rise in the mid-single-digit range, with August projected to go down in the low-single digits to flat. For the fourth quarter, the company said it is comfortable with current consensus estimates of 32 to 33 cents and flat comps. Full-year EPS guidance is now in the range of $1.65 to $1.67. Inventory levels are expected to be down 10 to 15 percent.
In addition to the 45 stores opened during the first half, AT plans to open five AT stores and 23 Loft stores in the second half.
The potent combination of lower expenses, higher margins and a double-digit sales gain helped tween market leader Too Inc. nearly double its net income in the second quarter.
The New Albany, Ohio-based specialty retailer also promoted six executives, including elevating chief financial officer Kent Kleeberger to the added role of chief operating officer, a new post.
Sally Boyer was promoted to the new position of president of merchandising of Too Inc. and was named to its board. Other promotions include: James Petty, executive vice president, stores and realty; Scott Bracale, executive vice president, marketing, catalog and Web; Joan Munnelly, executive vice president, merchandising and design for casual and active sportswear, and Lece Lohr to senior vice president for active sportswear.
For the three months ended Aug 3, Too, which was spun off from Limited Brands last year, reported net income skyrocketed 92.2 percent to $5.5 million, or 16 cents a diluted share, a penny ahead of Wall Street’s already raised expectations. In last year’s quarter, the firm earned $2.9 million, or 9 cents. New stores and higher expenditures per transaction drove sales for the quarter up 12.6 percent to $141.2 million compared with $125.5 million, while comparable-store sales were flat."The second-quarter earnings proved to be a great finale to spring," Michael Rayden, chairman, president and chief executive, said on a conference call.
Rayden noted that Too’s best-performing categories were active bottoms and shorts, jeanswear, skirts, swimwear and its lifestyle category. These were offset by weakness in dresses and personal care.
The company is gearing up for a strong back-to-school selling season as sales so far are tracking on plan. It has a number of merchandising and marketing programs highlighting peasant and preppie styles.
Regarding Mishmash, its new concept catering to the younger teenager, Rayden said he is pleased with the overall trends and is planning to open 30 additional stores next year and 40 to 50 in 2004. He noted he believes Mishmash can grow to become a 700-store chain. Too’s flagship division expects to open 30 new stores in the second half, 18 to 20 in the third quarter and 10 to 12 in the fourth. Too currently operates 485 stores and Mishmash 11.
For the first half, income was $11.4 million, or 34 cents a diluted share, which is 70.1 percent higher than last year’s income of $6.7 million, or 21 cents. Sales grew 14.4 percent to $299.8 million from $262.1 million.
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