Ann Inc. profit drops amid port dispute; still tops Street

New York -- Ann Inc. on Friday posted a 94% drop in profit for the fourth quarter as incremental air freight costs in response to the West Coast ports dispute and lower margins resulting from increased promotional activity cut into sales. Its results, however, topped the Street forecasts. The company also announced efforts to deliver an additional $35 million in cost savings by 2016 through a new selling, general and administrative optimization program.



For the fourth quarter, the company's net income fell to $262 thousand from $4.68 million in the year-ago period.



Total net sales for the quarter were $647.4 million, compared with net sales of $623.3 million last year.



Total same-store sales increased 1.0% on top of an increase of 2.9% in fourth quarter 2013.



The company's gross margin declined 350 basis points to 45.8%, primarily due to higher promotional activity at both Ann Taylor and Loft, as well as the 130 basis point impact of incremental air freight costs incurred in response to the West Coast port situation.



Kay Krill, president and CEO, said: "Despite a highly promotional and competitive environment, Ann Inc. achieved positive comparable sales and effectively managed expenses in the fourth quarter, generating bottom-line results that came in slightly ahead of the outlook we provided in November. In addition, we delivered on our commitment to clear excess inventory, entering fiscal year 2015 in a healthy position in all channels."



Total net sales for the full year of fiscal 2014 were $2.53 billion, compared with net sales of $2.49 billion in fiscal 2013 $959.8 million in fiscal 2013. Total company comparable sales for the full year of fiscal 2014 decreased 1.9%