ANN TAYLOR CORP. EARNINGS DOUBLE IN FOURTH QUARTER

Byline: Jennifer L. Brady

NEW YORK — Fueled by an expanded product line and a 19.9 percent leap in same-store sales, Ann Taylor Stores Corp. reported earnings nearly doubled in the fourth quarter before special year-ago charges.
The women’s specialty retailer earned $8.4 million, or 35 cents a share, in the quarter ended Jan. 28, up from $4.2 million, or 19 cents, before the special items. After charges of $1.9 million to cover the opening of a new distribution center and refinancing, year-ago net was reduced to $2.5 million, or 11 cents.
Earnings came in line with Wall Street estimates, and the market reacted positively to the news Tuesday, with Ann Taylor shares rising 1 1/2 to 33 1/2 on the New York Stock Exchange. Sales in the quarter surged 40.4 percent to $189 million from $134.6 million. Jeffrey Edelman, analyst at C.J. Lawrence, said better-than-expected sales gains offset some pressure on gross margins, which slid to 44 percent in the quarter from 46 percent a year earlier. He said the margin erosion came from Ann Taylor’s move toward “value pricing,” with lower markups on denim jeans and legwear, as well as lower margins in its outlet business.
Susan Silverstein, analyst at Gruntal & Co., cited expanded offerings of denim and footwear and last year’s introductions of petites and a fragrance for much of the growth.
“Ann Taylor continues to add product categories, which is helping same-store sales,” she said. She expects Ann Taylor to earn $1.85 in fiscal 1995, but noted that with its aggressive store expansion plans, she may raise it.
In the year ended Jan. 28, income before special items in both periods more than doubled to $32.6 million from $14.3 million. After an $868,000 charge for refinancing activities, net income in the latest year came to $31.8 million, or $1.36 a share. Earnings in fiscal 1993 were $3.2 million, or 15 cents, after a $11.1 million refinancing charge.
Sales advanced 31.3 percent to $658.8 million from $501.6 million, and same-store sales moved ahead 13.7 percent.
Merchandise inventories increased to $93.7 million as of Jan. 28 from $60.9 million. On a per-square-foot basis, inventories were 22 percent higher than a year ago, reflecting the addition of shoes and accessories, including the Destination fragrance line introduced last fall.
Ann Taylor operates 262 stores in 38 states and the District of Columbia.
— Fairchild News Service

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