AnnTaylor Stands Out Amid Blood Bath

AnnTaylor is surging following news that it will significantly beat first-quarter earnings predictions.
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) --

AnnTaylor Stores


is managing to avoid the market's blood bath, as it expects first-quarter profit to "significantly exceed expectations."

Shares of the women's apparel retailer are surging 6.7% to $24.16, even as the rest of the sector and market gets annihilated. AnnTaylor attributes the optimism to stronger-than-expected sales and higher margins during the period.

It now expects sales of $475 million, from prior forecast of $445 million. Analysts are calling for sales of $452.8 million.

AnnTaylor saw its margins jump to nearly 59%, significantly higher than its forecast of 56.5%. Comparable sales are also predicted to climb 11%, with a 15% surge at its namesake stores and 9% growth at Loft.

"We see top-line and margin opportunity from AnnTaylor's three-tiered pricing strategy, which should drive better full-price selling, growing higher-margin accessories category, increased marketing spend and strong direct growth," UBS analyst Roxanne Meyer wrote in a note. Meyer calls out the stock as one of her top picks in the specialty retail universe.

Wall Street Strategies analyst Brian Sozzi upgraded AnnTaylor to buy last week and raised his price target on the stock to $29 from $28.

Sozzi says this earnings optimism is also good news for apparel retailers, as it was the latest sign that consumers are heading back to the malls and outlet centers.

-- Reported by Jeanine Poggi in New York.

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