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| Ann Taylor Reports Third Quarter 2009 Results |
For the quarter, the Company reported earnings per diluted share of "We have made significant progress on enhancing and differentiating our brands and providing our clients with style, quality and value. LOFT's product offering resonated with our clients, with casual apparel performing particularly well. I am pleased with the response to our newer categories, which expand the LOFT brand to better serve our clients' lifestyle needs. At Ann Taylor, the launch of the new Fall collection was an important first step in our multi-season strategy to reposition the brand. The initial client response has been encouraging, and we look forward to further progress as we continue to test, learn from and refine the assortment. Looking ahead, we expect to build on the product successes we've achieved to date and move forward on our objective of building sales momentum and profitable growth." Fiscal 2009 Third Quarter Results Net sales for the third quarter of fiscal 2009 were Comparable store sales for the quarter declined 13.7% versus the prior year. At Ann Taylor, comparable store sales declined 25.8% and at LOFT, comparable stores sales declined 9.7%. Gross margin, as a percentage of sales, was 57.3%, 850 basis points higher than the gross margin rate achieved in the third quarter of 2008. This strong gross margin performance reflected the success of the Company's strategy to conservatively position inventory levels across both divisions as well as a lower level of promotional activity in the quarter. Selling, general and administrative expenses for the third quarter of 2009 declined by approximately During the quarter, the Company recorded a pre-tax restructuring charge of The Company also recorded pre-tax non-cash asset impairment charges totaling Excluding restructuring and asset impairment charges, the Company reported operating income of On a GAAP basis, the Company reported operating income of During the third quarter of 2009, the Company opened one LOFT store and closed one Ann Taylor store and one LOFT store. In addition, we converted one Ann Taylor store to LOFT. The total store count at the end of the third quarter was 932, comprised of 313 Ann Taylor stores, 509 LOFT stores, 92 Balance Sheet Highlights During the quarter, the Company paid down the balance of outstanding borrowings on its revolving credit facility, totaling Total inventory per square foot at the end of the third quarter of 2009 was down 20.7% versus year-ago, primarily reflecting total inventory declines of 19.4% and 17.0% per square foot at the LOFT and Ann Taylor divisions, respectively. Fiscal 2009 Nine-Months Results Net sales for the first nine months of fiscal 2009 were Comparable store sales for the first nine months of 2009 declined 22.6%, with a 36.1% decline at Ann Taylor and a 16.7% decline at LOFT. Gross margin, as a percentage of net sales, increased 340 basis points to 55.0% in the first nine months of 2009, compared to the first nine months of 2008. Selling, general and administrative expenses declined by approximately During the first nine months of 2009, the Company recorded pre-tax restructuring charges of The Company also recorded pre-tax non-cash asset impairment charges totaling Excluding the aforementioned pre-tax restructuring and asset impairment charges, operating income in the first nine months of 2009 was Net income, excluding the aforementioned after-tax restructuring and asset impairment charges, totaled Strategic Restructuring Program Update The Company's Strategic Restructuring Program, which was launched in Costs for the multi-year program are expected to total Fiscal 2009 Fourth Quarter Outlook The Company will continue to manage the business with a focus on gross margin performance, tightly managing inventories and expenses, and being competitive in what the Company expects to be a highly promotional retail environment in the fourth quarter. For the fourth quarter of 2009, the Company provided the following outlook:
-- Total sales dollars are expected to be slightly below those achieved in
the third quarter of 2009.
-- Gross margin rate performance is expected to decline from the levels
achieved in the third quarter of 2009, reflecting anticipated heightened
promotional activity to drive traffic and sales volume throughout the
holiday season. We expect the fourth quarter 2009 gross margin
performance to be considerably stronger than the levels achieved in the
fourth quarter of 2008.
-- Selling, general and administrative expenses are estimated to be
approximately
About Ann Taylor FORWARD-LOOKING STATEMENTS Certain statements in this press release are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements may use the words "expect", "anticipate", "plan", "intend", "project", "may", "believe" and similar expressions. Forward-looking statements also include representations of the expectations or beliefs of the Company concerning future events that involve risks and uncertainties, including:
-- the Company's ability to achieve the results of its restructuring
program, including the risk that the benefits expected from the
restructuring program will not be achieved or may take longer to achieve
than expected;
-- changes in management's assumptions and projections concerning costs and
timing in execution of the restructuring program;
-- general economic conditions and the current financial crisis, including
the effect on the Company's liquidity and capital resources, and a
downturn in the retail industry;
-- the behavior of financial markets, including fluctuations in interest
rates and the value of the U.S. dollar against foreign currencies, or
restrictions on the transfer of funds;
-- continuation of lowered levels of consumer spending, changes in levels
of store traffic, lowered levels of consumer confidence and higher
levels of unemployment resulting from the worldwide economic downturn;
-- the commercial and consumer credit environment;
-- continued volatility and further deterioration of the capital markets;
-- fluctuation in the Company's level of sales and earnings growth and
stock price;
-- the Company's ability to realize deferred tax assets and the effect of
external economic factors on the Company's future funding obligations
for its defined benefit pension plan;
-- competitive influences and decline in the demand for merchandise offered
by the Company, and the Company's ability to manage inventory levels;
-- the Company's ability to manage the profitability of its existing
stores, effectively renew or re-negotiate the terms of existing store
leases, or locate new store sites or negotiate favorable lease terms for
additional stores;
-- risks associated with the bankruptcy or significant deterioration of one
or more of our major national retail landlords;
-- the Company's ability to predict accurately client fashion preferences;
-- effectiveness of the Company's brand awareness and marketing programs,
and its ability to maintain the value of its brands;
-- the Company's ability to successfully execute brand extensions and new
concepts;
-- the Company's ability to secure and protect trademarks and other
intellectual property rights in
Further description of these risks and uncertainties and other important factors are set forth in the Company's latest Annual Report on Form 10-K, including but not limited to Item 1A - Risk Factors and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations therein, and in the Company's other filings with the
ANNTAYLOR STORES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters and Nine Months Ended October 31, 2009
and November 1, 2008
(unaudited)
Quarters Ended Nine Months Ended
-------------- -----------------
October 31, November 1, October 31, November 1,
2009 2008 2009 2008
---- ---- ---- ----
(in thousands, except per share amounts)
Net sales $462,410 $527,216 $1,359,386 $1,711,194
Cost of sales 197,555 270,060 611,500 828,911
------- ------- ------- -------
Gross margin 264,855 257,156 747,886 882,283
Selling, general and
administrative expenses 246,200 254,770 725,019 785,268
Restructuring charges 630 19,893 32,722 26,761
Asset impairment charges 15,318 2,741 15,318 2,764
------ ----- ------ -----
Operating income/(loss) 2,707 (20,248) (25,173) 67,490
Interest income 186 311 750 1,571
Interest expense 788 325 2,598 1,025
--- --- ----- -----
Income/(loss) before
income taxes 2,105 (20,262) (27,021) 68,036
Income tax provision/
(benefit) 36 (6,815) (8,772) 26,336
-- ------ ------ ------
Net income/(loss) $2,069 $(13,447) $(18,249) $41,700
====== ========= ======== =======
Earnings per share:
-------------------
Basic earnings/(loss)
per share $0.04 $(0.24) $(0.32) $0.71
Weighted average shares
outstanding 56,855 56,252 56,727 57,697
Diluted earnings/(loss)
per share $0.03 $(0.24) $(0.32) $0.71
Weighted average shares
outstanding assuming
dilution 58,037 56,252 56,727 57,861
Number of stores open
at beginning of period 933 959 935 929
Number of stores opened
during period 1 15 14 63
Number of stores closed
during period (2) (8) (17) (26)
-- -- --- ---
Number of stores open
at end of period 932 966 932 966
--- --- --- ---
Number of stores
expanded/relocated
during period * - - 1 8
Converted Stores** 1 - 1 -
* Expanded stores are excluded from comparable store sales for the first year following expansion. ** During the quarter ended
ANNTAYLOR STORES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
October 31, 2009, January 31, 2009 and November 1, 2008
(unaudited)
October 31, January 31, November 1,
2009 2009 2008
---- ---- ----
Assets (in thousands)
Current assets
Cash and cash equivalents $134,104 $112,320 $80,687
Short term investments 5,698 - -
Accounts receivable 26,283 14,081 23,421
Refundable income taxes 7,717 35,270 -
Merchandise inventories 211,194 173,447 274,450
Deferred income taxes 28,475 25,422 33,925
Prepaid expenses and other
current assets 62,196 63,056 61,406
------ ------ ------
Total current assets 475,667 423,596 473,889
Property and equipment, net 388,370 469,687 545,958
Goodwill - - 286,579
Deferred financing costs, net 1,048 1,275 1,370
Deferred income taxes 42,082 53,253 25,840
Other assets 7,064 12,628 20,051
----- ------ ------
Total assets $914,231 $960,439 $1,353,687
======== ======== ==========
Liabilities and Stockholders' Equity
Current liabilities
Trade notes and accounts
payable $92,228 $109,205 $118,835
Accrued salaries and bonus 27,426 23,883 26,103
Accrued tenancy 44,332 42,710 44,693
Gift certificates and
merchandise credits redeemable 35,842 45,605 38,043
Accrued expenses and other
current liabilities 81,861 84,180 89,698
------ ------ ------
Total current liabilities 281,689 305,583 317,372
Deferred lease costs 194,864 217,614 224,646
Deferred income taxes 1,673 1,898 1,633
Other liabilities 25,271 18,832 18,560
Commitments and contingencies
Stockholders' equity
Common stock,
SOURCE Investors: Judith Pirro, Director, Investor Relations, ext. 3598, or Press: Catherine Fisher, Vice President, Corporate Communications, ext. 2199, both of Ann Taylor Stores Corporation, +1-212-541-3300 |
