• Q4 profit slides 94.4% to $262,000
  • Sales up 3.9% to $647.4m
  • Supply chain initiative to generate US$50m gross margin benefit  
Ann Taylor sales climbed 1.5% during the fourth quarter

Ann Taylor sales climbed 1.5% during the fourth quarter

US women's apparel retailer Ann Inc has recorded a 94.4% slump in fourth-quarter profit, but says it expects its recently launched supply chain initiative to generate US$50m in annualised incremental gross margin by 2017. 

The retailer launched "a comprehensive, end-to-end assessment" of its supply chain at the end of last year with the aim of identifying opportunities "to enhance profitability, with a focus on speed, flexibility, improving product sell-through and reducing the cost of goods sold."

Initiatives will include improved regional sourcing/buying/scale, more efficient material use/fabric platforming/mill consolidation, re-engineering product, and using agents to complement direct sourcing. The benefits are expected to begin in 2016 and build into 2017.

The update came as the retailer said net income tumbled to US$262,000 for the three months to 31 January, compared to $4.7m in the same period of the prior year, weighed down by costs incurred in response to the West Coast port situation.

However, sales increased 3.9% to $647.4m from $623.3m last year, and comparable sales edged up 1%. By brand, net sales at Ann Taylor climbed 1.5% to $249.9m, while Loft booked a 5.4% gain to $397.5m.

Gross margin declined 350 basis points to 45.8% from 49.3%, primarily due to higher promotional activity at Ann Taylor and Loft, as well as the air freight costs incurred with the West Coast port delays.

During the full year, the company's net income declined 33.6% to $68m from $102.4m last year, while sales edged up 1.6% to $2.53bn from $2.49bn a year ago.

For fiscal 2015, Ann Inc expects net sales to be $2.57bn, assuming a comparable store sales increase in the low-single digits. Gross margin is forecast to reach 52%.

Click on the following link for further insight: IN THE MONEY: Nimble supply chain to add to Ann Inc profit