Baby Boomer specialty chain AnnTaylor Stores Corp. on Friday said it swung into a fourth-quarter loss, hurt by costs related to its restructuring program and a weakening missy apparel sector.

For the three months ended Feb. 2, the company posted a loss of $6.7 million, or 11 cents a diluted share, versus a profit of $21.5 million, or 31 cents, in the year-ago period. Excluding the current quarter’s restructuring charge, income was $11.5 million, or 19 cents a diluted share. Sales declined 1.6 percent to $600.8 million from $610.5 million, while total same-store sales dropped 3.2 percent. By division, comps decreased by 7.8 percent at Ann Taylor and fell by 0.5 percent at Loft.

For the full year, earnings declined 32 percent to $97.2 million, or $1.53 a diluted share, from $143 million, or $1.98, a year ago. Sales for the year grew 2.3 percent to $2.4 billion from $2.34 billion.

“Following a record year in fiscal 2006, this past year proved to be more difficult, given the soft macroeconomic environment and resultant impact on the retail sector and our company,” said Kay Krill, president and chief executive officer. “Importantly, we managed our inventory levels and in-store metrics very well all year, and we are entering fiscal 2008 in excellent shape.”

During the quarter the company unveiled a strategic restructuring program that is expected to save $50 million by 2010. The overhaul, which will cost $40 million to $45 million over the next three years, includes the closure of 117 underperforming stores and downsizing company headquarters.

Despite the weak results, Roxanne Meyer, retail analyst at Oppenheimer, said now is a good time for long-term investors to look at Ann Taylor.

“There have only been a handful of quarters in the past five years when both divisions performed well, yet there have been many opportunities to get rewarded in this stock,” she said in a research note. Disappointing results at one division create an attractive entry point, the analyst noted. “Ann Taylor still has strong brand equity, which keeps customers coming back until management rights the ship,” she concluded.

Going forward, the company expects 2008 to be challenging, especially in the first half. During the year the company plans to evolve their brands to add newness, scale back new store growth, implement their restructuring program to cut costs, expand the new Ann Taylor Factory business and launch the new Loft Outlet concept.

This story first appeared in the March 17, 2008 issue of WWD.  Subscribe Today.

Ann Taylor expects full-year earnings in the range of $1.80 to $1.90 a diluted share, excluding a one-time restructuring charge. First-quarter earnings are expected in the range of 35 cents a 40 cents a diluted share, excluding the one-time restructuring costs.

The company also said it will no longer provide monthly same-store sales results.

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