AnnTaylor ( ANN) keeps picking up the pace.

Just as many rivals are faltering, the women's apparel chain has become a rare bright spot in the sector this year. It continued that track record Wednesday, reporting solid sales and earnings for the second quarter and raising its guidance for the rest of the year. The performance was yet another affirmation that the company has put its fashion problems -- which last year weighed on sales and earnings -- behind it.

New York-based AnnTaylor, which operates the Ann Taylor and Loft chains, reported net income of $18.2 million, or 39 cents per share, compared with $6.4 million, or 15 cents a share in the year-ago period. This was a penny better than the company said it would earn when it raised guidance recently. Sales -- which the company previously reported when it released July sales numbers -- came in at $343 million, up from $310 million in sales in last year's second quarter.

"Gross margin on both full price and non-full price sales was strong throughout the season at both of our retail concepts, exceeding our expectations," said J. Patrick Spainhour, the chairman, in a statement.

Clearly, AnnTaylor is back on track, and investors have been amply rewarded: The stock, which closed Wednesday up 89 cents at $28.40, is up nearly 22% on the year, during a time when the major market averages have been pummeled.

The company, which constantly massages earnings guidance, raised its expectations for rest of the year. The company now expects earnings of 50 cents to 51 cents in the third quarter, up from prior guidance of 45 cents to 46 cents. For the full year, AnnTaylor now expects to earn between $1.66 and $1.68 per share. Previously it pegged 2002 earnings at $1.47 to $1.51.

At the same time, AnnTaylor set a $50 million stock buyback program.

Throughout 2002, AnnTaylor has performed well, as it finally got its fashion right. Last year the company pushed more fashion-forward and tighter clothing, a move that alienated its clientele, which had come to rely on the company for traditional, career-oriented clothing.

Meanwhile many other chains have suffered. Most notably, its rival Talbots ( TLB), which last year was a rising star among women's fashion chains, has reported disappointing sales numbers and its stock has suffered. Gap ( GPS) has been on a well-publicized slide for more than two years. And more recently, teen-oriented retailers Hot Topic ( HOTT) and Wet Seal ( WTSLA) warned that earnings would fall far short of expectations.

At least for now, Ann Taylor is back in style.

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