AnnTaylor Stores Corp., propelled by strong response to spring fashions selling at full price, swung into the black for the first quarter and said the momentum is continuing.

This story first appeared in the May 24, 2010 issue of WWD. Subscribe Today.

On Friday, the company posted a $22.6 million net profit for the first quarter ended May 1 compared with a loss of $2.3 million in the year-ago period. Earnings per diluted share came to 38 cents against a year-ago loss of 3 cents.

Comparable-store sales increased 14.1 percent, with the Ann Taylor division ahead 16.4 percent and Loft up 12.5 percent.

The report followed the pattern seen in companies from Gap Inc. to Saks Inc., Macy’s Inc. to Target Corp. Many retailers have posted stellar first quarters, fueling perceptions of pent-up demand and better feelings among consumers about the economy, after last year’s debacle.

Ann Taylor spent the past two years restructuring with new management, design overhauls, store closings and cost cutting and cited its own efforts as the primary reason for the strong performance. “We are knocking the ball out of the park,” Kay Krill, Ann Taylor’s president and chief executive officer, told WWD.

Krill did acknowledge that consumers being generally more apt to open their wallets and pay full price, and favorable weather, were factors, but only to a degree. “A lot of it was what we did,” she stated.

The ceo added business has stayed strong despite rising concerns the recovery could be derailed by the faltering euro. “We are very pleased with our performance to date,” she said. “We are positive comping in May and on track to have a good month. Consumers have an appetite for fashion, color and novelty and we have all three elements. We are not seeing traffic pull back. This whole year we will have global issues to worry about that we can’t control. We can control what we have in the store.”

Total sales for the quarter reached $476.2 million from $426.7 million a year ago. By brand, Ann Taylor’s sales rose to $198.4 million from $178.3 million, and Loft rose to $277.8 million from $248.5 million. The gross margin rate was 59.4 percent, from 55.5 percent in the year-ago quarter.

At Ann Taylor, wear-to-work categories, namely suitings, sportswear separates and dresses, paced the business. Pants and accessories were strong, too. A prototype, with 40 percent less square footage than most units, will be unveiled in three markets in the third quarter. Ann Taylor operates 283 stores and peaked at about 350. Though there’s been square footage reduction, Krill said when productivity levels are high enough and there’s confidence in the prototype, expansion can resume. “We fully believe that Ann Taylor can be a 400-to-500-unit chain,” she said.

Loft was spurred by fashion and newness, prints and novelty looks. There are 510 Lofts and 18 Loft outlets as well as 92 Ann Taylor outlets. Krill said the Loft prototype, opened May 7 in Paramus, N.J., is generating very good results. “We took the board there. We are opening 10 stores for the remainder of the year, all in the prototype” format, Krill said.

In a conference call, she said the online businesses will be “replatformed” this summer with technology enhancements for faster checkouts, mobile selling, enhanced international shipping and expanding the assortment. “A goal of doubling the e-com business is very achievable,” added Michael J. Nicholson, executive vice president, chief financial officer and treasurer.

For the second quarter, the company projects sales to approach $500 million off double-digit comps. For the year, sales of $1.95 billion to $1.98 billion and positive comps for all divisions and selling channels are projected.

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