Ann Inc. topped Wall Street earnings expectations in the first quarter on the strength of the Loft division. But the Ann Taylor brand saw comparable-store sales fall 6.9 percent, with a 15.5 percent drop at its stores, as the company steered away from price cuts.
“In the [Ann Taylor] stores channel, we significantly reduced promotional activity as we focused on reinforcing the aspirational nature of the brand,” Kay Krill, chief executive officer, said. “We have invested more in opening price points and select categories, and are seeing great success so far.…We definitely have become more surgical in our approach to markdowns and promotions in this channel, and we are definitely improving our gross margin rate and we will continue to be surgical in our approach as well.”
The firm’s net income rose 5.2 percent to $28.7 million, or 58 cents a diluted share, from $27.3 million, or 51 cents, a year earlier. Earnings for the most recent quarter came in 7 cents ahead of the 51 cents analysts expected. Sales for the three months ended April 28 increased 7 percent to $560.4 million from $523.6 million on a 3.8 percent comparable-store sales rise.
Comps at the Loft brand rose 11.3 percent, and Krill said customers responded well to the division’s entire product offering, driving strong conversion.
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“Woven and knit tops delivered very strong results,” Krill said of Loft. “Pants, shorts, skirts, dresses, accessories and shoes were also exceptionally strong. Color worked across all categories and Loft’s print and pattern offering was also very successful, with stripes being a standout.”
About 70 percent of Loft’s assortment was priced under $50 during the quarter.
Shares of Ann rose 3.2 percent to $26.68 Friday.