Ann Inc. beats Street with profit, but sales fall short

New York – Ann Inc. beat Wall Street expectations with strong profit growth in the first quarter of fiscal 2015, but revenue growth fell short of the Street’s outlook.



The company, which is being acquire by Ascena Retail Group for $2.2 billion, reported that its net income more than doubled to $13.6 million from $5.2 million the same quarter a year earlier, driven by lower restructuring charges and selling, general and administrative (SG&A) expenses that more than offset a softer gross margin.



Net sales grew 11% to $597.73 million from $590.92 million.



Total same-store sales fell 1.5%. At Ann Taylor, same-store sales declined 3.0%, reflecting an increase of 2.6% at Ann Taylor, which includes Ann Taylor stores and anntaylor.com, and a decline of 14.5% in the Ann Taylor Factory channel.



At Loft, total same-store sales declined 0.6%, reflecting decreases of 0.7% at Loft, which includes Loft stores and Loft.com, and 0.2% in the Loft Outlet channel.



"Ann Inc. delivered bottom-line results for the quarter that exceeded our expectations,” said Kay Krill, president and CEO. “We were able to achieve these results, despite softer-than-anticipated gross margin performance, through continued effective management of expenses.”



The results reflected a weak February but positive comparable sales performance at both Ann Taylor and LOFT in the combined March and April period, as clients responded positively to our new spring assortments that coincided with the onset of warmer weather. In addition, the company completed an implementation of omnichannel endless aisle capability ahead of schedule.



Looking ahead, Ann Inc. expects second quarter net sales to be $660 million, reflecting total same-store sales that are slightly positive. For the full fiscal year, Ann Inc. expects total net sales to be $2.56 billion, reflecting a total same-store sales increase in the low-single digits.