AnnTaylor issues cautious holiday outlook
AnnTaylor swings to profit in the third quarter, ending a positive week for women's retailers.
By 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.
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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The solid report comes a month after the retailer closed all of its Canadian operations.
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