NEW YORK (
) -- Shares of
Ann Taylor Stores
reached a new 52-week high on Thursday after the New York-based women's fashion retailer topped Wall Street earnings expectations for its third-quarter results by nearly 24%.
"Similar to last quarter, Ann
Taylor made another giant leap in terms of recovering lost business," said Jefferies & Co. analysts in a note to clients after the company posted adjusted earnings of 42 cents a share vs. average analyst view of 34 cents. "Total comp was up 23%, driven by strength in all channels and metrics. The 'wear to work' category continues to be particularly strong, and relevant product design and effective messaging throughout the brand is drawing in both old and new customers."
The stock was up $2.15, or 9%, to $25.90 in recent trades with volume of 5.2 million more than doubling the issue's trailing three-month daily average of 2.1 million. Year-to-date, the shares are up more than 70% already as the session's peak of $26.12 below past a prior 52-week high of $25.24 set back in early May. The stock hasn't closed above $26 since September 2008 in the midst of the financial crisis.
Ann Taylor also gave a favorable outlook for the fourth quarter, forecasting sales that will "approach" $500 million with same-store sales for its namesake stores seen rising mid-to-high single digits and comps for its LOFT concept projected to rise in the low single-digits. The slow progress of at LOFT in the September period was a sticking point for the mildly bearish Jefferies, which kept a hold rating on the stock following the report but lifted its 12-month price target by 35% to $23 from $17.
"LOFT once again lagged behind Ann Taylor, with same store sales down ~1%," the firm noted, adding later: "The customer at this brand appears to be more price sensitive and cautious than at Ann Taylor, which could hold back margins somewhat. However, we are encouraged by the sequential improvement and expect continued acceleration."
Wall Street's current expectation for the company's fourth quarter ending in December is for a profit of 13 cents a share on sales of $495 million. Kay Krill, Ann Taylor's president and CEO, acknowledged the company would be aggressive about pricing in the holiday season but was optimistic overall. "While we anticipate a promotional environment in the upcoming months, we feel good about our overall business as we enter the fourth quarter and believe we are well-positioned in terms of our product, inventories, marketing initiatives and our planned promotional strategies for the Holiday season," Krill said in a statement.
The breakdown of the opinions of the 16 analysts covering the stock right now is four at strong buy, five at buy and seven at hold and there is slim upside in the median 12-month price target of $27 at current levels.
The forward price-to-earnings multiple on the shares, based on the current consensus view for earnings of $1.51 a share in the fiscal year ending in January 2012, is 17X, which puts the valuation in the middle of a 26X multiple for
( LIZ) and 11X for
Written by Michael Baron in New York.
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