NEW YORK — Hampered by $17 million in one-time pretax charges relating to inventory write-offs and the write-down of some of its Internet assets, Ann Taylor reported a net loss of $332,000 in its fourth-quarter despite robust same-store growth at its Loft unit and improvement in gross margins.
Exclusive of charges, income almost doubled to $10 million, or 34 cents a diluted share, for the quarter ended Feb. 2, a penny ahead of Wall Street’s expectations. Last year, the company reported income of $3.8 million, or 13 cents, after aftertax charges aggregating to $1.3 million or 5 cents a share.
Total sales for the quarter increased 8.1 percent to $371.4 million from $343.6 million. Comparable-store sales rose 2.1 percent versus a 4.3 percent decrease in the year-ago period. By division, comps were flat at the AT stores, although improved from year-ago levels, and were up 8.1 percent at its Loft division.
Ann Taylor chairman J. Patrick Spainhour stressed that the firm was “confident that our offering at the Ann Taylor division has returned to the updated classic styles and assortment levels that have built the brand’s success.”
Ann Taylor’s numbers came out after the close of the market, but its shares leaped $1.45, or 3.7 percent, to close at $41 on the New York Stock Exchange, approaching its 52-week high of $43.15, reached Feb. 13.
“The close of fiscal 2001 marked an end to a very challenging period at our Ann Taylor division,” Spainhour said on an afternoon conference call.
Erasing the nonrecurring charges, gross profits grew 13.8 percent, to $168.2 million, in the quarter as inventories per square foot declined 9 percent. However, selling, general and administrative costs rose 19.6 percent, attributable to higher occupancy costs, those associated with the expansion of Loft and others included in one-time charges for the quarter.
Even with the charges, the firm could point to numerous signs that it had started to turn the corner after disappointments and earnings declines that dated back to the final quarter of 2000.
Still weighed down by earlier problems, income at Ann Taylor fell by 44.4 percent to $29.1 million, or $1 a share, compared with last year’s earnings of $52.4 million, or $1.76. Sales inched up 5.4 percent to $1.3 billion from $1.23 billion. Comps for 2001 were off 6.1 percent, down 8.8 percent at AT and up 4 percent at Loft.
February comps were down 0.6 percent compared with a comp decrease of 6.1 percent last year. By division, comps were down 0.5 percent for the AT group, versus 9.9 percent last year, and down 2.1 percent at its Loft group, against an increase of 12.2 percent. Spainhour pronounced himself “very pleased with our full-price selling and gross margin rates at both of our concepts.”
Based on the stronger February results, AT raised its first-quarter EPS estimate to between 52 and 54 cents, from 48 to 52 cents, but left the remaining quarters unchanged. For the first half, the firm said it anticipates comp and inventory levels to be flat.