ANN INC. Reports Record Third Quarter 2012 EPS Results

            ANN INC. Reports Record Third Quarter 2012 EPS Results

-- Company Performance Driven By Increased Sales and Strong Gross Margin Rate
--

-- Company Successfully Launches Multichannel Initiative --

-- Delivers Positive Comp Performance at Both Ann Taylor and LOFT Brands --

-- Raises Outlook for Fiscal 2012 --

PR Newswire

NEW YORK, Nov. 28, 2012

NEW YORK, Nov. 28, 2012 /PRNewswire/ --ANN INC. (NYSE: ANN) today reported
results for the fiscal third quarter of 2012, ended October 27, 2012. The
Company also provided its outlook for the fourth quarter and increased its
outlook for the full year of fiscal 2012.

For the fiscal third quarter of 2012, the Company reported diluted earnings
per share of $0.84, compared with earnings per diluted share of $0.61 in the
third quarter of 2011. Diluted earnings per share for the fiscal third
quarter of 2012 included a benefit of $0.08 related to the recognition of gift
card and merchandise credit breakage, without which, diluted earnings per
share reached a third quarter record of $0.76.

Kay Krill, President and CEO, said, "We are very pleased to report that ANN
INC. delivered record EPS results again this quarter. Significant top-line
growth, coupled with a double-digit percentage increase in operating income,
contributed to a 25 percent increase in diluted earnings per share, excluding
the $0.08 benefit. Our strong performance was driven by both Ann Taylor and
LOFT. Both brands delivered a positive comp for the quarter by remaining
clearly focused on what's important to our clients: great fashion, excellent
quality, outstanding value and a seamless and engaging shopping experience.

"In addition, we have made significant progress on our strategic initiatives
to drive future growth and profitability. Among the highlights, in September
we successfully launched the first phase of our multi-channel initiative,
which is off to a strong start and will provide meaningful opportunities to
better leverage our inventory investment and maximize sales and gross margin.
During the quarter, we also made our entry into Canada, opening our first
store in Toronto in September, followed by two additional stores in November.
The response has been outstanding, and we are very excited about the
opportunities in this market. Overall, it was an excellent quarter for ANN
INC., and we have entered the fourth quarter in a strong position."

Fiscal 2012 Third-Quarter Results

Total net sales for the third quarter of fiscal 2012 were $612.5 million,
compared with total net sales of $564.0 million in the third quarter of fiscal
2011. By brand, net sales across all channels of the Ann Taylor brand totaled
$244.6 million in the third quarter of 2012, compared with net sales of $229.7
million in the third quarter of 2011. At the LOFT brand, net sales across all
channels were $368.0 million in the third quarter of 2012, compared with net
sales of $334.3 million in the third quarter of 2011.

Total Company comparable sales for the quarter increased 5.5%, on top of an
increase of 5.5% in the third quarter of 2011. At Ann Taylor, total brand
comparable sales increased 4.3%, reflecting increases of 5.6% at Ann Taylor,
which includes sales results from both Ann Taylor stores and anntaylor.com,
and 1.7% in the Ann Taylor Factory channel. At LOFT, total brand comparable
sales were up 6.2%, reflecting an increase of 8.0% at LOFT, which includes
sales results from both LOFT stores and LOFT.com, slightly offset by a decline
of 3.0% in the LOFT Outlet channel. (Please refer to Table 3 for a breakdown
of sales by brand and channel.)

Gross margin, as a percentage of net sales, was 57.9%, compared with the 57.5%
gross margin rate achieved in the third quarter of 2011. The strong gross
margin performance in the third quarter of 2012 reflected favorable client
response to our product and lower promotional activity versus the third
quarter of 2011 at both brands.

Selling, general and administrative expenses for the third quarter of 2012
were $287.5 million versus $269.5 million reported in the third quarter of
2011. As a percentage of net sales, selling, general and administrative
expenses improved 90 basis points to 46.9% compared to the third quarter 2011
rate of 47.8%. The improved SG&A rate during the third quarter of 2012
primarily reflected fixed cost leveraging resulting from higher net sales,
partially offset by expenses associated with our year-over-year store growth
and other expenses supporting the expansion of the business. 

The Company reported operating income of $66.9 million in the third quarter of
2012, compared with operating income of $54.7 million in the third quarter of
2011. Net income was $40.7 million in the third quarter of 2012, versus the
$32.3 million reported in the third quarter of 2011. Diluted earnings per
share of $0.84 included the aforementioned benefit of $0.08 related to
recognition of a portion of the unredeemed value of gift cards and merchandise
credits. Excluding this benefit, diluted earnings per share was $0.76, an
increase of 25 percent compared with earnings per diluted share of $0.61 in
the third quarter of 2011.

The Company ended the quarter with approximately $167 million in cash and cash
equivalents.

Total Company inventory per square foot, including inventory for both stores
and e-commerce, at the end of the fiscal third quarter of 2012 decreased 5%,
reflecting a 1% increase at Ann Taylor, a 1% decrease at LOFT and an 18%
decrease in the factory outlet channel. 

During the third quarter of fiscal 2012, the Company opened 25 stores,
comprised of four Ann Taylor stores, one Ann Taylor Factory store, eight LOFT
stores and twelve LOFT Outlet stores. The Company also closed three Ann
Taylor and three LOFT stores. The total store count at the end of the fiscal
third quarter was 981, comprised of 278 Ann Taylor stores, 101 Ann Taylor
Factory stores, 510 LOFT stores, and 92 LOFT Outlet stores.

Fiscal 2012 Nine-Month Results

Net sales for the first nine months of fiscal 2012 were $1.8 billion, compared
with net sales of $1.6 billion in the first nine months of fiscal 2011. By
brand, net sales across all channels of the Ann Taylor brand were $690.2
million in the first nine months of 2012, compared with net sales of $670.5
million in the first nine months of 2011. At the LOFT brand, net sales across
all channels were $1,077.6 million in the first nine months of 2012, compared
with net sales of $975.3 million in the first nine months of 2011.

Total Company comparable sales for the first nine months of 2012 increased
4.7%, on top of an increase of 7.3% in the comparable period of 2011. At Ann
Taylor, total brand comparable sales increased 0.9%, including increases of
0.6% at our multichannel Ann Taylor business and 1.5% in the Ann Taylor
Factory channel. At LOFT, total brand comparable sales increased 7.1%,
including increases of 8.2% at our multichannel LOFT business and 0.4% in the
LOFT Outlet channel. (Please refer to Table 3 for a breakdown of sales by
brand and channel.)

Gross margin, as a percentage of net sales, was 56.8% in the first nine months
of 2012, compared with 56.6% in the first nine months of 2011.

Selling, general and administrative expenses for the first nine months of 2012
were $839.0 million, versus $788.7 million in the first nine months of 2011.
As a percentage of net sales, selling, general and administrative expenses
improved 40 basis points versus the prior year to 47.5%. The improvement in
the SG&A rate primarily reflected fixed cost leveraging resulting from higher
net sales, partially offset by expenses associated with our year-over-year
store growth and other expenses supporting the expansion of the business.

The Company reported operating income of $165.2 million in the first nine
months of 2012, an increase of 16% compared with operating income of $142.3
million in the first nine months of 2011. Net income was $100.2 million in
the first nine months of 2012, an increase of 19% versus the $84.4 million
reported in the first nine months of 2011. Diluted earnings per share in the
first nine months of 2012 was $2.05, an increase of 30% over the $1.58 per
diluted share reported in the first nine months of 2011.

Outlook for Fiscal Fourth-Quarter and Full-Year 2012

For the fiscal fourth quarter of 2012, the Company expects total net sales to
be approximately $625 million, reflecting a total Company comparable sales
increase in the mid-single digits. Gross margin rate performance is expected
to be 51.0%. Selling, general and administrative expenses are estimated to be
$300 million.

In terms of the full year, the Company anticipates the following:

  oTotal net sales for fiscal 2012 are now expected to be $2.395 billion,
    reflecting a total Company comparable sales increase in the mid-single
    digits.

  oGross margin rate performance is expected to be approximately 55%.

  oTotal SG&A expenses are expected to approach $1.140 billion.

  oThe Company's effective annual tax rate is expected to be approximately
    40%.

  oCapital expenditures are expected to be approximately $160 million.

  oTotal weighted average square footage for fiscal 2012 is expected to
    increase slightly, reflecting the opening of approximately 65 new stores,
    partially offset by the impact of downsizes at Ann Taylor stores and
    approximately 30 store closures. The Company expects to have
    approximately 985 stores at fiscal year-end. 

  oThe Company expects to maintain its healthy balance sheet, including a
    disciplined approach to inventory management for the remainder of the
    fiscal year.

About ANN INC.

ANN INC. is the parent Company of Ann Taylor and LOFT, two of the leading
women's specialty retail fashion brands in North America. The Company
operates 981 Ann Taylor, Ann Taylor Factory, LOFT and LOFT Outlet stores in 47
states, the District of Columbia, Puerto Rico and Canada as of October 27,
2012, as well as online at AnnTaylor.com and LOFT.com. Visit ANNINC.com for
more information (NYSE: ANN).

Forward-Looking Statements

Certain statements in this press release are forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements may use the words
"expect," "anticipate," "plan," "intend," "project," "may," "believe" and
similar expressions. Forward-looking statements also include representations
of the expectations or beliefs of the Company concerning future events that
involve risks and uncertainties, including:

  othe Company's ability to anticipate and respond to changing client
    preferences and fashion trends and provide a balanced assortment of
    merchandise that satisfies client demands in a timely manner;
  othe effectiveness of the Company's brand awareness and marketing programs,
    and its ability to maintain the value of its brands;
  othe Company's ability to manage inventory levels and changes in
    merchandise mix;
  othe Company's reliance on key management and its ability to hire, retain
    and train qualified associates;
  othe Company's ability to successfully implement its business
    transformation initiatives and upgrade and maintain its information
    systems, including adequate system security controls, successful
    transitioning of certain information technology functions to third parties
    and the ability to operate in accordance with its business continuity plan
    in the event of a disruption;
  othe Company's ability to secure and protect trademarks and other
    intellectual property rights;
  othe performance and operation of the Company's websites and the risks
    associated with Internet sales;
  othe Company's ability to successfully execute brand goals, objectives and
    new concepts;
  othe impact of fluctuations in sourcing costs, in particular increases in
    the costs of raw materials, labor, fuel and transportation;
  othe depressed levels of consumer spending and consumer confidence
    resulting from the worldwide economic downturn and financial crisis;
  othe Company's reliance on foreign sources of production and the associated
    risks of doing business in foreign markets, including fluctuations in the
    value of the U.S. dollar against foreign currencies, the imposition of
    duties or other possible trade law or import restrictions, including
    legislation relating to import quotas, and financial or political
    instability in any of the countries in which the Company's merchandise is
    manufactured;
  othe Company's reliance on third-party manufacturers and key vendors,
    including operational risks such as reduced production capacity, errors in
    complying with merchandise specifications, insufficient quality control
    and failure to meet production deadlines;
  othe Company's ability to successfully manage store growth and optimize the
    productivity and profitability of its store portfolio;
  othe impact of a privacy breach and the resulting effect on the Company's
    business and reputation;
  oa significant change in the regulatory environment applicable to the
    Company's business and the Company's ability to comply with legal and
    regulatory requirements;
  othe failure by independent manufacturers to comply with the Company's
    social compliance program requirements;
  othe effect of competitive pressures from other retailers;
  othe effect of continued uncertainty in the global economy on the Company's
    liquidity and capital resources;
  othe Company's dependence on its Louisville distribution center and
    third-party distribution facilities and transportation companies,
    including any significant interruptions due to work stoppages, slowdowns
    or strikes by employees of the third-party vendors that it utilizes;
  othe impact on the Company's stock price relating to the Company's level of
    sales and earnings growth;
  oacts of war or terrorism in the United States or worldwide, and the
    potential impact of natural disasters and public health concerns,
    including severe infectious diseases, particularly on the Company's
    foreign sourcing offices and the manufacturing operations of the Company's
    vendors;
  othe Company's dependence on shopping malls and other retail centers to
    attract customers;
  othe impact of potential consolidation of commercial and retail landlords
    on the Company's ability to negotiate favorable rental terms;
  othe effect of external economic factors on the Company's future funding
    obligations for its defined benefit pension plan; and
  othe impact of climate change on the Company's business.

Further description of these risks and uncertainties and other important
factors are set forth in the Company's latest Annual Report on Form 10-K,
including but not limited to Item 1A – Risk Factors and Item 7 – Management's
Discussion and Analysis of Financial Condition and Results of Operations
therein, and in the Company's other filings with the SEC. Although these
forward-looking statements reflect the Company's current expectations
concerning future events, actual results may differ materially from current
expectations or historical results. The Company does not assume any
obligation to publicly update or revise any forward-looking statements at any
time for any reason.



ANN INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Quarters and Nine Months Ended October 27, 2012 and October 29, 2011

(unaudited)
Table 1.
                        Quarter Ended             Nine Months Ended
                        October 27,   October 29,  October 27,   October 29,
                        2012          2011         2012          2011
                        (in thousands, except per share amounts)
Net sales               $  612,548  $           $1,767,831    $1,645,832
                                      564,003
Cost of sales           258,149       239,763      763,660       714,839
Gross margin            354,399       324,240      1,004,171     930,993
Selling, general and    287,480       269,498      838,954       788,656
administrative expenses
Operating income        66,919        54,742       165,217       142,337
Interest income         398           97           1,054         430
Interest expense        389           541          1,209         1,352
Other non-operating     (24)          -            (24)          -
expense
Income before income    66,904        54,298       165,038       141,415
taxes
Income tax provision    26,156        22,018       64,823        57,029
Net income              $           $          $  100,215  $   84,386
                        40,748       32,280
Earnings per share:
Basic earnings per      $        $       $        $     
share                   0.85          0.62         2.07          1.61
Weighted average shares 47,422        51,389       47,638        51,583
outstanding
Diluted earnings per    $        $       $        $     
share                   0.84          0.61         2.05          1.58
Weighted average shares
outstanding, assuming   47,973        52,072       48,256        52,441
dilution



ANN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

October 27, 2012, January 28, 2012 and October 29, 2011

(unaudited)
Table 2.
                           October 27,      January 28,        October 29,
                           2012             2012               2011
Assets                     (in thousands, except share amounts)
Current assets
 Cash and cash            $    166,532  $    150,208    $    139,590
equivalents
 Accounts receivable      30,873           19,591             31,132
 Merchandise inventories  270,385          213,447            278,174
 Refundable income taxes  10,179           11,965             25,953
 Deferred income taxes    34,933           30,999             29,742
 Prepaid expenses and     66,611           49,107             56,367
other current assets
Total current assets       579,513          475,317            560,958
Property and equipment,    412,626          360,890            363,901
net
Deferred income taxes      17,027           39,134             25,117
Other assets               15,073           12,340             12,447
Total assets               $  1,024,239   $    887,681    $    962,423
Liabilities and
Stockholders' Equity
Current liabilities
 Accounts payable         $    120,303  $     94,157  $    107,499
 Accrued salaries and     25,862           16,122             15,094
bonus
 Current portion of
long-term performance      32,069           19,373             19,383
compensation
 Accrued tenancy          46,419           41,435             41,938
 Gift certificates and
merchandise credits        34,147           50,750             37,643
redeemable
 Accrued expenses and     101,071          64,060             79,966
other current liabilities
Total current liabilities  359,871          285,897            301,523
Deferred lease costs       162,092          159,435            164,558
Deferred income taxes      402              1,320              575
Long-term performance
compensation, less current 24,777           42,122             36,484
portion
Other liabilities          28,669           35,030             23,215
Commitments and
contingencies
Stockholders' equity
 Common stock, $.0068 par
value; 200,000,000 shares
 authorized; 82,563,516  561              561                561
shares issued
 Additional paid-in       828,054          811,707            806,837
capital
 Retained earnings        674,473          574,257            572,077
 Accumulated other        (4,816)          (5,318)            (2,284)
comprehensive loss
 Treasury stock,
34,192,540; 33,284,631
and
 30,190,855 shares,      (1,049,844)      (1,017,330)        (941,123)
respectively, at cost
 Total              448,428          363,877            436,068
stockholders' equity
 Total liabilities  $  1,024,239   $    887,681    $    962,423
and stockholders' equity



ANN INC.

Brand Sales and Store Data

For the Quarters and Nine Months Ended October 27, 2012 and October 29, 2011

(unaudited)
Table 3.
During the third quarter of Fiscal 2012, the Company revised its presentation
of certain sales data from a channel-specific approach that segregated brand
store sales from brand internet sales to an approach which considers the
impact of our multi-channel initiative. All year-to-date and prior period
sales and comps have been adjusted to conform to the current period
presentation.
                 Quarter Ended
Sales and Comps  October 27, 2012                  October 29, 2011
                 Sales              Comp %         Sales            Comp %
                                    (1)                             (1)
                 ($ in thousands)
Ann Taylor brand
Ann Taylor (2)  165,906            5.6      %     155,897          2.8     %
Ann Taylor       78,649             1.7      %     73,816           1.8     %
Factory
Total Ann Taylor $   244,555     4.3      %     $   229,713   2.5     %
brand
LOFT brand
LOFT (2)        307,736            8.0      %     281,290          7.7     %
LOFT Outlet      60,257             (3.0)    %     53,000           10.9    %
Total LOFT brand $   367,993     6.2      %     $   334,290   7.9     %
Total Company    $   612,548     5.5      %     $   564,003   5.5     %
                 Nine Months Ended
Sales and Comps  October 27, 2012                  October 29, 2011
                 Sales              Comp %         Sales            Comp %
                                    (1)                             (1)
                 ($ in thousands)
Ann Taylor brand
Ann Taylor (2)   $   459,806     0.6      %     $   450,631   8.4     %
Ann Taylor       230,400            1.5      %     219,854          5.8     %
Factory
Total Ann Taylor $   690,206     0.9      %     $   670,485   7.5     %
brand
LOFT brand
LOFT (2)         $   907,099     8.2      %     $   833,024   6.5     %
LOFT Outlet      170,526            0.4      %     142,323          16.3    %
Total LOFT brand $  1,077,625      7.1      %     $   975,347   7.1     %
Total Company    $  1,767,831      4.7      %     $  1,645,832    7.3     %



Table 3. (Continued)
                                     Quarter Ended
Stores and Square Footage            October 27, 2012      October 29, 2011
                                     Stores  Square Feet   Stores  Square Feet
                                     (square feet in thousands)
Ann Taylor brand
 Ann Taylor Stores               278     1,414         276     1,448
 Ann Taylor Factory              101     697           97      691
Total Ann Taylor brand               379     2,111         373     2,139
LOFT brand
 LOFT Stores                     510     2,948         503     2,931
 LOFT Outlet                     92      627           74      519
Total LOFT brand                     602     3,575         577     3,450
Total Company                        981     5,686         950     5,589
Number of:
 Stores open at beginning of      962     5,594         942     5,563
period
 New stores                       25      134           12      60
 Downsized/expanded stores (3)    -       (13)          -       (12)
 Closed stores                    (6)     (29)          (4)     (22)
 Stores open at end of period     981     5,686         950     5,589
                                     Nine Months Ended
Stores and Square Footage            October 27, 2012      October 29, 2011
                                     Stores  Square Feet   Stores  Square Feet
                                     (square feet in thousands)
Number of:
 Stores open at beginning of      953     5,584         896     5,283
period
 New stores                       49      267           68      436
 Downsized/expanded stores (4)    -       (54)          -       (51)
 Closed stores                    (21)    (111)         (14)    (79)
 Stores open at end of period     981     5,686         950     5,589

(1) A store is included in comparable sales in its thirteenth month of
    operation. A store with a square footage change of
    greater than 15% is treated as a new store for the first year following
    its reopening.
(2) Includes sales at front-line stores and online.
(3) During the quarter ended October 27, 2012, the Company downsized five Ann
    Taylor stores and three LOFT stores and
    expanded one Ann Taylor store and one LOFT store. During the quarter ended
    October 29, 2011, the Company
    downsized two Ann Taylor stores.
(4) During the nine months ended October 27, 2012, the Company downsized 14
    Ann Taylor stores, four Ann Taylor
    Factory stores, four LOFT stores and one LOFT Outlet store and expanded
    two Ann Taylor stores and one LOFT store.
    During the nine months ended October 29, 2011 the Company downsized nine
    Ann Taylor stores and two Ann Taylor
    Factory stores.





SOURCE ANN INC.

Website: http://www.anntaylor.com
Contact: Investor Contact: Judith Lord, Vice President, Investor Relations,
ANN INC., +1-212-541-3300 ext. 3598; Press Contact: Catherine Fisher, Vice
President, Corporate Communications, ANN INC., +1-212-541-3300 ext. 2199
 
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