Ahead Of The Bell: FBR Upgrades AnnTaylor

NEW YORK (AP) — AnnTaylor Stores Corp.'s customers are starting to shop again, merchandise is improving and cost controls are boosting profit margins, an FBR Capital Markets analyst said, boosting her investment opinion on the women's retailer to the firm's top rating.

AnnTaylor caters to the "missy," or women's shopper. That sector was one of the first to slow as moms cut back on spending on themselves, and has hurt sales at AnnTaylor and at rivals such as Chico's FAS Inc. and Talbots Inc. Now, said analyst Adrienne Tennant, after "nearly three years of 'shopping her closet," the female shopper is ready to buy again.

That's going to drive "sustainable" positive sales at established stores for the next year and a half, Tennant wrote in a research note, especially as the chain is improving its merchandise offerings with more up-to-date products. Chico's and Talbots are already seeing improvements, she said. She upgraded the stock to "Outperform" from "Market Perform."

Further, an improved cost structure is boosting profit margins until sales improve, Tennant said. She hiked her price target to $19 from $13. On Thursday, shares closed at $8.16.