Discounting Rips AnnTaylor

The women's clothing chain swings to a loss in the fourth quarter.
By TSC Staff ,

AnnTaylor Stores

(ANN)

swung to a loss in the fourth quarter, as the women's clothing chain racked up severance and pension costs and discounting hurt profit margins.

The New York-based company posted a net loss of $12.5 million, or 18 cents a share, compared with a profit of $31.8 million, or 43 cents a share. Excluding items, the company lost 7 cents a share. Analysts expected a loss of that size, according to Thomson First call.

Revenue in the period ended Jan. 29 was $487.3 million, up 8.6% from the year-ago period. Same-store sales fell 4%.

The results include previously announced charges of about $3 million, or 3 cents a share, associated with severance. Also factors were $2.7 million, or 2 cents a share, of additional pension expenses, and a $7 million, or 6 cents a share, expense related to rent.

Gross margin as a percentage of net sales plummeted to 43%, vs. 54.8% because of higher average unit costs as well as discounting.

The company reiterated first-quarter EPS guidance of 27 cents to 30 cents. Analysts expect 25 cents.

AnnTaylor also said company president Kay Krill will succeed CE0 Patrick Spainhour in October.

Shares fell 2 cents to $25.25 in the premarket.

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