US: Encouraging focus by Ann Inc on supply chain initiatives
- Q1 earnings fall to $5.2m
- Gross margin narrows to 53.4%
- Sales climb 2.8%
Ann Inc enjoyed stronger merchandise margin at Ann Taylor during the first quarter
Analysts have been encouraged by Ann Inc's focus on supply chain initiatives, which they believe could help drive significant margin improvement over time.
The women's apparel group revealed earnings of US$5.2m in the three months ended 3 May. This compared to a net profit of $20.9m in the year ago period, and reflected a $10.2m after-tax restructuring charge. Excluding the charge, net income amounted to $15.4m.
Gross margin narrowed to 53.4%, versus 55.8% achieved in the first quarter of last year. This primarily reflected stronger merchandise margin at Ann Taylor that was offset by higher-than-anticipated promotional levels at Loft and in its factory outlet channels.
Total sales climbed 2.8% to $590.6m, while comparable sales dropped 1.8%.
Nonetheless, FBR & Co analysts Susan Anderson and Andrew Schmidt believe the company's focus on its supply chain, including speed to market, flexibility, and improved logistics, is encouraging.
"After what was a renewed focus on omni-channel via its organisational restructuring, Ann is beginning to look at the supply chain for faster speed to market, enhanced flexibility, and more efficient logistics. We view the supply chain initiatives as positive, and believe that combined with omni-channel, they could help to drive significant margin expansion over the next couple of years," they noted.
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