Ann Taylor 3Q Earnings Beat Estimates, Analyst Says Buy

NEW YORK (TheStreet) - Shares of Ann Inc. (ANN), the parent company to Ann Taylor and LOFT brands, are rising after the women's specialty retailer beat earnings estimates by 3 cents a share and posted better-than-expected sales.

The stock was up 1% to $36.61 in morning trading.

Ann Inc. and other retailers continue to operate in a highly promotional retail environment. Wall Street is watching closely the extent of margin erosion at many retailers, especially in the all-important holiday season, as consumers continue to remain cautious about where they spend their money.

Another specialty retailer, Gap (GPS), reported better-than-expected earnings late Thursday, but reaffirmed - as opposed to raising -- previous guidance for the year, suggesting that with massive competition and strong promotions, this year's holiday selling season could prove challenging.

Ann Inc. posted third-quarter earnings of $41.2 million, or 89 cents a share, compared to $407 million, or 84 cents a share, in the year-earlier quarter. The year-earlier quarter included an 8-cent gain related to gift card and merchandise credit breakage.

Quarterly net sales for the Nov. 2-ending quarter rose 7% to $657.5 million over last year fueled by strong sales at LOFT. Sales were above analysts' expectations of $654.2 million, according to Yahoo! Finance.

Sales at all Ann Taylor channels, which includes factory and online sales, rose by 1.8% to $249.2 million. The LOFT brand brought in total sales of $408.4 million, up 11% compared to the year-earlier period.

Total comparable sales for the company increased 3.7%, below last year's gain of 5.5% but above the 2.8% gain the second quarter. Comparable sales at Ann Taylor rose just 0.6%, which was hurt by a 6.9% decline in the Ann Taylor Factory channel. That said, comp growth at LOFT jumped 5.6% in the quarter.

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