NEW YORK -- Shares of Ann Taylor (ANN) tumbled to a fresh low on Thursday, after the women's retailer lowered its third-quarter sales outlook below Wall Street expectations because of a tough economy.
The stock declined $0.52, or 9.72%, to a seven-year low of $4.83.
Ann Taylor forecast third-quarter sales of $527 million, down 12% from $601 million last year. Analysts polled by Thomson Reuters expect higher sales of $567.3 million.
Ann Taylor also expects earnings per share, excluding restructuring and non-cash impairment costs, to break even. Analysts expect earnings of 46 cents per share."The dramatic deterioration in both the financial markets and the macroeconomic environment in September and October has put additional pressure on the retail industry, in general, and the women's apparel sector," President and Chief Executive Kay Krill said in a statement. Krill said the company is moving "more aggressively" to accelerate ways to trim costs, and savings from a restructuring are expected to exceed previous estimates. The company expects to total ongoing annual savings of between $80 million and $90 million over three years, compared with the $50 million previously expected, but restructuring costs are expected to range between $65 million and $70 million over the same time. Same-store sales in the third quarter dropped 19%, with trends weakening dramatically as the quarter progressed. Same-store sales is an important retail metric that measures sales at stores open at least one year. For the Ann Taylor division, same-store sales declined 25%, and same-store sales declined 15% for the Loft division. Looking ahead, the company expects current weakness in consumer spending to persist through the fourth quarter of 2008 and 2009. It plans to update its guidance when it reports earnings later this month.