Ann, Inc. Q3 Profit Declines, Adj. Earnings Top Estimates; Backs Sales View

(RTTNews) - Women's apparel retailer Ann, Inc. (ANN) Friday reported a decline in the third-quarter profit, reflecting lower revenues and margins. Adjusted earnings, however, topped analysts' estimates, while revenues fell short of the consensus view.

The parent company of Ann Taylor and LOFT also backed its sales forecast for the fourth quarter and full year.

Kay Krill, president and chief executive officer said, "...our performance reflected weak traffic across the industry, a highly promotional retail environment and the impact of labor uncertainty at the West Coast ports, which resulted in product shipment delays in the first half of the quarter and higher air freight expense later in the period."

In addition, Ann Taylor experienced soft product performance in select categories, resulting in its first negative comparable sales performance in the last ten quarters.

For the third quarter, the company's net income fell to $29.86 million or $0.65 per share from $41.19 million or $0.89 per share in the previous year.

The results included $0.07 per share, after-tax charge associated with closure of Ann Taylor's Madison Avenue store. Excluding charge, earnings were $0.72 per share in the third quarter of 2014.

On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.68 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter declined to $646.81 million from $657.53 million in the same quarter last year, while 17 analysts expected revenues of $648.27 million for the quarter.

Total company comparable sales decreased 4.3 percent, compared to an increase of 3.7 percent last year.

Net sales across all channels of Ann Taylor brand dropped to $233.0 million from $249.2 million in the prior year. Comparable sales were down 6.6 percent.

LOFT brand net sales increased to $413.8 million from $408.4 million a year earlier, while total brand comparable sales decreased 2.9 percent.

The company's gross margin was 52.6 percent, compared with 55.7 percent a year ago.

Looking ahead, for the fourth quarter, the firm still expects total net sales to be $630 million, reflecting a comparable sales decline in the low-single digits. Wall Street expects revenues of $628.88 million for the period.

For fiscal 2014, the company continues to expect total net sales of $2.516 billion, reflecting a total company comparable sales decline in the low-single digits. Wall Street expects revenues of $2.52 billion for fiscal 2014.

ANN closed Thursday's trading at $38.34, up 2.93 percent. In the pre-market activity on Friday, the stock was down 1.41 percent, to trade at $37.80.