
Press Release
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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 |