AnnTaylor issues cautious holiday outlook

AnnTaylor swings to profit in the third quarter, ending a positive week for women's retailers.

By TheStreet Staff Nov 20, 2009 11:36AM

TheStreet.comBy Jeanine Poggi, TheStreet.com

 

AnnTaylor Stores ends a calm week for women’s clothing retailers by swinging to a profit in its third quarter.

 

Still, the retailer issued a sluggish holiday outlook, sending shares tumbling 5.9% to $13 in pre-market trading.

 

During the quarter, the company earned $2.07 million, or 3 cents a share, compared with a loss of $13.4 million, or 24 cents, in the year-earlier period.

 

Excluding restructuring charges of 17 cents a share, AnnTaylor said it would have earned 20 cents a share, easily topping analysts' estimates of 7 cents.

 

Bing: More on AnnTaylor

 

Sales slipped 12% to $462.4 million from $572.2 million, while same-store sales tumbled 14%. By division, comparable sales sank 26% at its namesake chain, and were down 9.7% at Loft.

 

The majority of the earnings gain came from strong gross margins.

 

Looking ahead, AnnTaylor foresees fourth-quarter sales to decline slightly from the third quarter. Analysts are calling for revenue of $458.2 million.

 

And like Target, the company foresees a "highly promotional" holiday.

 

"Sales guidance is slightly below our fourth-quarter sales estimates,” UBS analyst Roxanne Meyer wrote in a research report. “While gross margin is expected [to be up] significantly, the bar on the Street is already high.”

 

On Thursday, rival New York & Co. said it narrowed its loss in its third quarter and expects to move out of the red in the fourth quarter.

 

Dress Barn said first-quarter profit grew 10% as sales improved. The retailer also raised its 2010 guidance to a range of $1.20 to $1.30 per share, more than the $1.20 a share analysts forecast.

 

But the clear winner in the women's apparel sector this week was Chico's, which posted a gain in profit and sales in its third quarter.

 

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