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Cool Weather Drags Down Ann Inc. Net

Profits fell 27.2 percent in the first quarter, while sales gained 2.5 percent.

NEW YORK — Ann Inc.’s profits caught a chill in the first quarter.

Net income fell 27.2 percent to $20.9 million, or 44 cents a diluted share, from $28.7 million, or 58 cents, a year earlier. The retailer warned investors last month that unseasonably cool weather had hurt results.

Sales for the quarter ended May 4 gained 2.5 percent to $574.5 million from $560.4 million as comparable sales slipped 0.5 percent. Comps in Ann Taylor’s mainline business increased 6.2 percent as Ann Taylor Factory comped down 5.8 percent. The Loft business comped down 0.9 percent while Loft Outlet fell 7.9 percent.

“There is no question that the cold, unseasonable conditions during the first quarter had a significant impact on our business, primarily at Loft,” said Kay Krill, president and chief executive officer, on a conference call with analysts.

Krill said business picked up as the weather grew warmer and that both Ann Taylor and Loft were on track to be more profitable.

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“We have absolutely realized that the first quarter and the third quarter need to be more transitional assortment and better balance between wear-now and warm-weather product,” the ceo said. “Our balance was definitely off.”

The company is focusing on a number of areas to drive growth this year, including multichannel fulfillment that makes better use of inventory across its Web and store operations, international shipping and real estate tweaks. The company plans to continue “right-sizing” its Ann Taylor doors, shifting to its smaller, more productive new concept store layout. Loft is being expanded into small and midsize markets.

Roxanne Meyer, an analyst at UBS, said the Loft division would likely make more use of its omnichannel positioning to clear markdowns. “We expect to see an increased use of flash sales and category promos online — higher margins than clearing in stores — while store promo levels are expected to remain in line with last year.”