AnnTaylor ( ANN) swung to a better-than-expected fourth-quarter profit thanks to strong sales at its flagship and AnnTaylor Loft chains.

The company earned $27.4 million, or 38 cents a share, in the quarter, compared with a loss of $12.5 million, or 18 cents a share, a year ago. Adjusted earnings were $31.3 million, or 43 cents a share, in the latest quarter, beating the Thomson First Call estimate by 3 cents.

Quarterly sales rose 17.8% to $574 million, reflecting a same-store sales gain of 6.8%. By division, net sales were $245.9 million for Ann Taylor, up from $220.2 million last year, and $271.3 million for Ann Taylor Loft, up from $217.2 million last year. Comps rose 9.8% for Ann Taylor and 5.5% for Ann Taylor Loft.

"We saw dramatic improvement in sales, gross margin and earnings in the second half of the year, while operating profit as a percentage of sales increased significantly, from 3.8% in the first half to 8.6% in the second half," the company said. "As we enter fiscal 2006, we look forward to building on this momentum as we take further steps to build our brands and enhance productivity."

For the current fiscal year, AnnTaylor said it's comfortable with expected earnings of $1.66 to $1.71 a share, excluding stock options. Analysts were forecasting earnings of $1.67 a share. It expects fiscal 2006 comparable store sales to rise by a percentage in the low single-digit range over 2005, with gross margin improving over last year.

The stock rose $1.65, or 4.7%, to $36.98 on Instinet.