Ann Taylor's Profit Surges

But shares are down after hours on lukewarm guidance.
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Second-quarter earnings jumped at women's specialty retailer

Ann Taylor

(ANN)

, matching analysts' consensus, as sales shot up more than 20%.

But the company also forecast third- and fourth-quarter earnings within a range that could fall below analysts' projections. Shares of the company were down $1.05, or 4.8%, to $21 in Wednesday after-hours trading, after closing the regular session down 55 cents, or 2.4%, at $22.05.

New York-based Ann Taylor said after the bell Wednesday that it earned $30.2 million, or 41 cents a share, in the quarter ended July 31, compared with $21.2 million, or 30 cents a share, in the year-earlier period. (Results in the prior-year period were restated to reflect a 3-for-2 stock split in May).

Sales rose 21.1% to $472.6 million from $390.2 million a year ago, while same-store sales rose 7%. By division, same-store sales spiked 18.1% at the company's Loft division, and they were up 0.8% at Ann Taylor stores.

"The company achieved record net income for the second quarter, driving earnings performance that increased 37% over last year," the company said in a statement. "Our new store growth strategy and strong comparable store sales contributed to the double-digit sales growth experienced during both the second quarter and spring season."

Gross margins expanded to 53% from 51.9% in the second quarter last year. Meanwhile, selling, general and administrative expenses were 42.3% of sales, down slightly from the prior-year quarter's 42.7%. The company cited higher same-store sales.

Ann Taylor forecast August same-store sales to be flat to slightly negative, but third-quarter results are expected to be up in the midsingle digits and fourth-quarter same-store sales are seen up in the low-single digits.

The company expects third-quarter earnings of 48 cents to 50 cents a share; the Wall Street consensus is 50 cents a share. That would compare with 42 cents a share in the third quarter last year.

For the fourth quarter, Ann Taylor expects to earn 47 cents to 49 cents a share, while analysts are calling for 49 cents a share. The company earned 43 cents a share in the previous-year fourth quarter.

As a result, Ann Taylor anticipates full-year earnings of $1.79 to $1.83 a share. Analysts polled by Thomson First Call are expecting $1.83 a share. Ann Taylor earned $1.42 a share in 2003.