Tags: Ann | ANN | apparel retail | stocks

Ann Taylor Fashionably On-Target

Monday, 29 Aug 2011 11:12 AM

By Constance Gustke

Traditional department store sales may be crumbling, but specialty retailers are gaining traction. Specialty apparel sales rose 6 percent in 2010 versus 1.9 percent industry-wide, according to NPD Fashionworld data.

This specialty niche serves Ann (ANN), formerly known as Ann Taylor Stores, well. The women’s apparel retailer has 907 stores in 46 states. At its 506 LOFT stores, 70 percent of the goods are under $50. The mainstay Ann Taylor Stores, which sell women’s work wear, number 291.

These days, the apparel chain is fashionably on-target. Second quarter sales rose 15 percent to $558.2 million versus $483.5 million a year ago, spurred by same store sales of 8.6 percent. Earnings per share soared 52 percent, marking the eighth quarter of double-digit growth.

Ann CEO Kay Krill credited the stellar results to three sales engines: LOFT stores, e-commerce, and factory channels. Adding more factory outlets and beefing up the e-commerce site will “accelerate growth,” she added.

A consolidating retail landscape can boost specialty retailers, note S&P analysts. For now, apparel is highly fragmented. Twenty companies with national brands command only 30 percent of total apparel sales. The rest is divvied up among smaller store brands, leaving room for bigger retailers like Ann to gobble up market share.

Erratic growth

Of the 17 analysts followed by Thomson/First Call, six have strong buy recommendations and three have buys on Ann, with eight holds and one underperform.

S&P analysts deem Ann a hold, citing its erratic earnings history, disappointing Ann Taylor division store growth, and economic uncertainty. The company reports next in mid-November.

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