NEW YORK — Bucking the market’s sharp decline on Friday, shares of Ann Taylor Stores Corp. rose 7/8 to 17 3/4 on the New York Stock Exchange after J.P. Morgan upgraded the stock to “buy” from “market performer.”
The gain came against a 171.25-point drop in the Dow Jones Industrial Average.
In a research report, analyst Maura Hunter Byrne said the upgrade is based on “greater confidence in the company’s ability to continue to improve merchandise offerings under Sally Frame Kasaks, to sharpen operational efficiencies under Patrick Spainhour and to pick up its real estate program in 1997.”
She noted that merchandise assortments have improved, with further improvement expected as the year continues, and full-price selling “was slightly higher than last year” in February, even with some winter goods in the stores. As reported, Ann Taylor’s same-store sales fell 7 percent in February.
Byrne estimated the specialty retailer will lose 5 cents in the fourth quarter, with yearend inventory per square foot “at least 20 percent below” last year. The chain reports earnings on Tuesday.
Among risk factors, Byrne cited the poor financial condition of Cygne Designs Inc., which supplies 15 percent of Ann Taylor’s offerings. A joint venture between Ann Taylor and Cygne accounts for another 35 percent of the retailer’s merchandise, according to Byrne.

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