ANN TAYLOR FEELING POSITIVE ABOUT FALL
Byline: David Moin
NEW YORK — Ann Taylor Stores Corp. could be in for another roller coaster ride this year.
After getting too young and fashion forward, missing on fit and reporting negative comps last year, the $1.2 billion retailer for women executives and executive wannabes expects a tough spring, then a healthier fall marked by a return to “that classic Ann Taylor look” and positive comp-store figures.
In addition, the retailer will introduce large sizes this fall, and active and sleepwear in 2003. Of the company’s two retail divisions, The Loft is expanding more aggressively and should exceed the Ann Taylor division’s volume in four or five years.
That overview came from Barry Erdos, senior vice president and chief operating officer, during a presentation Wednesday at the Banc of America Securities Consumer Conference at the New York Palace Hotel.
“Starting with late July and early August, we’ll have that classic Ann Taylor look most of our loyal clients expect. We walked away from it in the last few seasons,” he said.
Offering some guidance for the retail analysts and investors at the session, he said Ann Taylor will post negative low-single comp-store sales for the spring. In the fall, comps are seen turning positive, in the low- to mid-single-digit range. Most retailers are experiencing poor spring business and see a second-half pickup, but Ann Taylor’s ride has been rougher than most, exacerbated by product issues and management turnover on top of external economic factors.
Nevertheless, expansion continues, with around 70 new Loft stores and 20 Ann Taylor stores planned annually over the next four or five years. Loft sells more relaxed styles at prices 30 percent lower than the career-oriented Ann Taylor stores. Officials last year cited the possibility of ultimately operating 500 to 600 Loft stores around the country. The corporation has about 500 stores, the majority under the Ann Taylor logo.
Last year, eveningwear was a “disaster,” Erdos said. The category was overblown due to lingering millennium fever, to represent about 30 percent of the offerings. That’s been reduced for fall 2001 to about 10 percent, he said. “The Ann Taylor and Loft divisions both suffered from the penetration of eveningwear,” he said.
Last year, too, Erdos explained: “We presented a younger look and had some fit problems that didn’t flatter our customers.” Ann Taylor targets professional women in their mid-30s, typically certified public accountants, lawyers or investment bankers, with an average income of around $100,000. Loft targets recent college graduates aspiring to be executives and other professionals, like teachers, with incomes well under their Ann Taylor counterparts.
Management changes added to the recent woes, though Erdos said some key vacancies will be filled soon. Last year, Patricia DeRosa left as president and chief operating officer, and Diane Holtz, general merchandise manager, left to join Limited Design, leaving chairman and chief executive officer J. Patrick Spainhour shouldering additional responsibilities. While most of the design team has remained intact for the past few years, Erdos said that Spainhour “assumed a pretty hands-on role on the product side of the business.” He said that Spainhour has a reputation in sourcing, having set up Gap’s sourcing network before joining Ann Taylor.
“He clearly has a knowledge of product and how it is produced and how it is presented,” Erdos said.
The design organization is “absolutely intact” and pretty much the same team is operating from 1998 and 1999, when Ann Taylor posted 8 percent comp-store gains, Erdos noted. However, last year, the retailer’s same-store sales dropped to negative 0.5 percent, while total sales rose 14 percent.
DeRosa supervised the Ann Taylor and Loft divisions and oversaw the 1998 rollout of Loft to shopping centers and strip malls. Previously, Loft was only in outlet malls. The firm also began deemphasizing key items such as silk T-shirts, twin cotton sweaters and weekend attire to focus on pricier suits, dresses and casual business attire, which some observers said alienated many customers.
With Loft growing at a fast clip, a separate president for that division, and another president for Ann Taylor, are being sought. Each will report to Spainhour. After the meeting, Erdos told WWD that they should be named within about two months. He declined to comment on candidates.
Erdos also provided details about performance expectations and category additions, saying that large sizes will be tested online for the Ann Taylor division starting this fall, though he said the company is not intending to open a separate large-size operation. Activewear and sleepwear will be tested beginning 2003, he said. And last fall, the company added cosmetics for the first time to 57 doors. Results in cosmetics have been less than desired, but the test is continuing, as the company tries to resolve service issues.
For 2000, Ann Taylor reported income at $52.4 million, compared to $64.5 million the year before.