US: Ann Taylor swings to Q4 loss on restructuring costs
Women's wear retailer AnnTaylor Stores has swung to a fourth quarter loss on hefty costs related to its restructuring programme and lower traffic at its namesake shops.
For the three months to 2 February, net loss was $6.7m, or $0.11 per share, compared with a profit of $21.5m, or $0.31 per share last year. During the quarter, the company recorded a $30.1m restructuring charge for its planned store closures.
Excluding the restructuring charge, net income in the quarter was $11.5m, or $0.19 per share.
Net sales for the quarter dropped 1.6% to $600.8m from $610.5m.
By division, net sales at Ann Taylor fell 12.0% to $214.0m from $243.4m, while sales at the Loft unit were up 3.0% to $293.3m from $284.8m.
Comparable store sales for the quarter declined 3.2% versus the prior year, with a drop of 7.8% at Ann Taylor and 0.5% at Loft.
The company said it was hurt by a double-digit decline in traffic at Ann Taylor and a lack of "newness" in its assortments.
Gross margin, as a percentage of net sales, increased 1.1 margin points to 48.7% in the fourth quarter, compared with a gross margin of 47.6% in the same period last year.
In January, the company began a restructuring programme to cut $50m in annual costs annually by 2010.
It plans to close 117 stores, scale back new store growth, expand the Ann Taylor Factory business and launch the new Loft Outlet concept.
For the fiscal year, net income fell 32.0% to $97.2m, or $1.53 per share, from $143m, or $1.98 per share last year.
Revenue rose 2% to $2.4bn from $2.34bn a year ago, with sales at Ann Taylor down 5.1% to $866.6m and at Loft up 2.4% to $1,174.4m.
Commenting on the results, Ann Taylor president and chief executive officer Kay Krill described fiscal 2007 as "difficult," given the soft macroeconomic environment.
She said the company expects fiscal 2008 to be "challenging - particularly in the first half."
In its outlook for 2008, the company expects earnings per share to be in the range of $1.80 to $1.90, excluding restructuring costs.
Anny Taylor currently operates 349 Ann Taylor stores, 512 Loft stores and 68 Ann Taylor Factory stores.
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