Ann Lowers Q3, 2014 Revenue Outlook

(RTTNews) - Women's apparel retailer Ann, Inc. (ANN) the parent Company of Ann Taylor and LOFT, on Friday lowered its revenue forecast for the third quarter, saying that results for the quarter at both the Ann Taylor and LOFT brands fell short of its expectations.

The company also projected revenue for the fourth quarter below analysts' expectations and once again lowered its revenue outlook for fiscal 2014.

Kay Krill, President and CEO, said, "Our results for the third quarter at both the Ann Taylor and LOFT brands fell short of our expectations, reflecting lower mall traffic and a highly promotional retail environment. In addition, sales during the first half of the quarter were negatively impacted by product shipment delays related to labor uncertainty at the West Coast ports, which were mitigated by the use of air freight later in the quarter."

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

The New York-based company now projects total net sales for the third quarter to be $647 million, reflecting a comparable sales decline of 4.3 percent. Earlier, the company had forecast total net sales of $670 million for the quarter, reflecting comparable sales of flat to slightly negative.

On average, 18 analysts polled by Thomson Reuters expect the company to report quarterly revenues of $666.21 million.

At the Ann Taylor brand, total comparable sales decreased 6.6 percent, reflecting decreases of 4.8 percent at Ann Taylor and 10.4 percent in the Ann Taylor Factory channel. At the LOFT brand, total comparable sales declined 2.9 percent, reflecting decreases of 3.3 percent at LOFT and 1.0 percent in the LOFT Outlet channel.

Looking ahead to the fourth quarter, Ann forecast net sales of $630 million, reflecting a comparable sales decline in the low-single digits. Wall Street expects quarterly sales of $641.92 million.

Ann said its fourth-quarter outlook anticipates continued challenges in the overall retail environment, a highly promotional holiday selling season and incremental air freight costs associated with its contingency plans to mitigate the impact of the West Coast port labor uncertainty.

For fiscal 2014, Ann now projects total net sales of $2.516 billion, reflecting a total company comparable sales decline in the low-single digits. In August, the retailer projected full-year net sales of $2.560 billion, on flat comparable sales. Analysts have a consensus revenue estimate of $2.55 billion for the year.

Krill said, "Finally, I'm pleased to report that the Company has initiated a comprehensive, end-to-end assessment of its supply chain. This initiative is designed to identify opportunities to enhance profitability, with a focus on speed, flexibility, improving product sell-through and reducing the cost of goods sold."

In August, Ann reported an 8 percent decline in profit for the second quarter from the prior-year period, as higher sales were more than offset by soft traffic and lower margins due to higher-than-anticipated promotional activity.

ANN is trading at $37.00, up $0.40 or 1.09 percent on a volume of 1.11 million shares.