ANN INC. Reports Record Second Quarter 2013 EPS of $0.76, an Increase of 21% Over Second Quarter 2012

ANN INC. Reports Record Second Quarter 2013 EPS of $0.76, an Increase of 21% 
Over Second Quarter 2012 
- Company Delivers Positive Comp Performance at both the Ann Taylor and LOFT 
Brands - 
- Announces New $250 Million Share Repurchase Program - 
- Raises Outlook for Fiscal 2013 - 
NEW YORK, Aug. 23, 2013 /CNW/ - ANN INC. (NYSE: ANN) today reported results 
for the fiscal second quarter of 2013, ended August 3, 2013.  The Company also 
provided its outlook for the third quarter and raised its outlook for the full 
year of fiscal 2013. 
For the fiscal second quarter of 2013, the Company reported record earnings 
per diluted share of $0.76, an increase of 21 percent compared with earnings 
per diluted share of $0.63 in the second quarter of 2012. 
Kay Krill, President and Chief Executive Officer, commented, "ANN INC. 
delivered record earnings per share for the second quarter of 2013, which 
included a double-digit increase in net income and stronger sales versus the 
year-ago period.  I am especially pleased to report that both Ann Taylor and 
LOFT achieved positive comparable sales and strong profitability in a highly 
challenging and competitive environment.  In fact, the Ann Taylor brand 
generated its fifth consecutive quarter of positive comps.  At the LOFT brand, 
performance was significantly stronger than first quarter with a positive comp 
on top of last year's mid-single-digit comp growth. 
"Looking ahead, both brands are well-positioned to drive top-line growth and 
strong profitability in the second half of the year.  In addition, we are 
continuing to benefit from the positive impact of our strategic growth 
initiatives, which are providing us both near-term and long-term growth 
opportunities. Overall, we are on track to deliver record earnings per share 
for ANN INC. this year. 
"Finally, during the second quarter, we repurchased 1.5 million of our shares 
at a total cost of $49 million, marking the completion of our $600 million 
share repurchase authorization. I am very pleased that our Board has approved 
a new $250 million share repurchase program, reinforcing our ongoing 
commitment to further enhance shareholder value," Ms. Krill concluded. 
Fiscal 2013 Second Quarter Results 
Total net sales for the second quarter of fiscal 2013 were $638.2 million, 
compared with net sales of $594.9 million in the second quarter of fiscal 
2012.  By brand, net sales across all channels of the Ann Taylor brand totaled 
$245.2 million in the second quarter of 2013, compared with net sales of 
$233.3 million in the second quarter of 2012.  At the LOFT brand, net sales 
across all channels totaled $393.0 million in the second quarter of 2013, 
compared with net sales of $361.6 million in the second quarter of 2012. 
Total Company comparable sales for the quarter increased 2.8% versus the 
second quarter of 2012.  At Ann Taylor, total brand comparable sales increased 
3.1%, reflecting an increase of 9.3% at Ann Taylor, partially offset by a 
decline of 7.2% in the Ann Taylor Factory channel.  At LOFT, total brand 
comparable sales were up 2.5%, reflecting an increase of 3.7% at LOFT, 
partially offset by a decline of 3.2% 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 54.7%, versus the record 55.9% 
gross margin rate achieved in the second quarter of 2012, reflecting an 
overall increase in merchandise margin rate, which was more than offset by the 
effect of higher client shipping costs associated with multi-channel sales. 
The merchandise margin rate improvement reflected the strong performance at 
Ann Taylor and the factory/outlet channel, partially offset by slightly lower 
performance at LOFT, compared with the second quarter of 2012. 
Selling, general and administrative expenses for the second quarter of 2013 
were $289.3 million versus $279.5 million reported in the second quarter of 
2012.  As a percentage of net sales, selling, general and administrative 
expenses improved 170 basis points to 45.3% compared to the second quarter of 
2012, due to fixed cost leveraging resulting from higher net sales, partially 
offset by costs associated with our year-over-year store growth and other 
expenses supporting the expansion of the business. 
The Company reported operating income of $60.0 million in the second quarter 
of 2013, a 13% increase compared with operating income of $52.9 million in the 
second quarter of 2012.  Net income was $35.6 million in the second quarter of 
2013, an increase of 16% versus the $30.7 million reported in the second 
quarter of 2012.  Diluted earnings per share was $0.76, an increase of 21% 
compared to the $0.63 per diluted share reported in the second quarter of 2012. 
The Company ended the quarter with approximately $107 million in cash, 
following the repurchase of approximately 1.5 million shares of its stock at a 
cost of approximately $49 million during the fiscal second quarter of 2013. 
Total inventory per square foot at the end of the second quarter increased 8% 
versus year-ago, reflecting a 5% decrease at Ann Taylor, and increases of 18% 
at LOFT and 11% in the factory/outlet channel.   The increases at LOFT and the 
factory/outlet channel reflect the impact of timing shifts of merchandise 
receipts versus last year. 
During the second quarter of fiscal 2013, the Company opened 21 stores, 
comprised of three Ann Taylor stores, three Ann Taylor Factory stores, 11 LOFT 
stores and four LOFT Outlet stores, and closed one Ann Taylor store and two 
LOFT stores.  The total store count at the end of the fiscal second quarter 
was 1,007, comprised of 275 Ann Taylor stores, 105 Ann Taylor Factory stores, 
525 LOFT stores and 102 LOFT Outlet stores. 
First Half Fiscal 2013 Results 
Net sales for the first six months of fiscal 2013 were $1,212.7 million, 
compared with net sales of $1,155.3 million in the first half of fiscal 2012.  
By brand, net sales across all channels of the Ann Taylor brand were $464.4 
million in the first half of 2013, compared with net sales of $445.7 million 
in the first half of 2012.  At the LOFT brand, net sales across all channels 
were $748.3 million in the first half of 2013, compared with net sales of 
$709.6 million in the first half of 2012. 
Total Company comparable sales for the first half of 2013 increased 1.2%, on 
top of an increase of 4.3% in the comparable 2012 period.  At Ann Taylor, 
total brand comparable sales increased 2.6%, reflecting an increase of 7.8% at 
Ann Taylor, partially offset by a decrease of 6.6% in the Ann Taylor Factory 
channel.  At LOFT, total brand comparable sales increased by 0.4%, reflecting 
an increase of 1.5% at LOFT, and a decline of 5.3% 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 55.2% in the first half of 
2013, compared with 56.2% in the first half of 2012, reflecting an overall 
increase in merchandise margin rate, which was more than offset by the effect 
of higher client shipping costs associated with multi-channel sales. 
Selling, general and administrative expenses for the first half of 2013 were 
$576.0 million, versus $551.5 million in the first half of 2012.  As a 
percentage of net sales, selling, general and administrative expenses improved 
20 basis points versus the prior year period to 47.5%.  The improvement in the 
SG&A rate was primarily due to fixed cost leveraging resulting from higher net 
sales, partially offset by costs associated with our year-over-year store 
growth and other expenses supporting the expansion of the business. 
The Company reported operating income of $93.9 million in the first half of 
2013 compared with operating income of $98.3 million in the first half of 
2012.  Net income was $56.6 million in the first half of 2013, versus $59.5 
million reported in the first half of 2012.  Diluted earnings per share in the 
first half of 2013 was $1.20 per diluted share, compared with $1.21 per 
diluted share reported in the first half of 2012. 
Outlook for Fiscal Third Quarter and Full Year 2013 
For the fiscal third quarter of 2013, the Company expects total net sales to 
be $655 million, reflecting a total Company comparable sales increase in the 
mid-single digits.  Gross margin rate performance is expected to approach 
57.0%.  Selling, general and administrative expenses are estimated to be $305 
million. 
In terms of the full year, the Company has increased its outlook and has 
updated the following: 


    --  The Company currently expects fiscal 2013 total net sales to be
        $2.515 billion, reflecting a total Company comparable sales
        increase in the mid-single digits.
    --  Gross margin rate performance is expected to be 54.3%.
    --  Total SG&A expenses in fiscal 2013 are expected to be $1.190
        billion.
    --  The Company's effective tax rate is expected to be 41%.
    --  Capital expenditures are expected to be approximately $160
        million.
    --  Total weighted average square footage for fiscal 2013 is
        expected to increase approximately 4%, reflecting the opening
        of approximately 65 new stores, partially offset by the impact
        of store downsizes, primarily at Ann Taylor, and approximately
        30 store closures. The Company expects to have approximately
        1,020 stores at fiscal year-end.

The Company expects to maintain its healthy balance sheet, including a 
disciplined approach to inventory management throughout 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.  As of August 3, 
2013, the Company operated 1,007 Ann Taylor, Ann Taylor Factory, LOFT and LOFT 
Outlet stores in 47 states, the District of Columbia, Puerto Rico and Canada.  
Our Ann Taylor and LOFT brands are also available online in more than 100 
countries worldwide 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:
    --  the 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;
    --  the effectiveness of the Company's brand awareness and
        marketing programs, its ability to maintain the value of its
        brands and engage new and existing clients;
    --  the Company's ability to manage inventory levels and changes in
        merchandise mix;
    --  the Company's reliance on key management and its ability to
        hire, retain and train qualified associates;
    --  the Company's ability to successfully execute brand goals,
        objectives and new concepts and strategies, including
        international expansion;
    --  the 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;
    --  the potential impact of natural disasters and public health
        concerns, including severe infectious diseases, acts of war or
        terrorism in the United States or worldwide, particularly on
        the Company's foreign sourcing offices and the manufacturing
        operations of the Company's vendors;
    --  the performance and operation of the Company's websites and the
        risks associated with Internet sales;
    --  the 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;
    --  a significant change in the regulatory environment applicable
        to the Company's business and the Company's ability to comply
        with legal and regulatory requirements;
    --  the Company's ability to secure and protect trademarks and
        other intellectual property rights;
    --  the impact of fluctuations in sourcing costs, in particular,
        increases in the costs of raw materials, labor, fuel and
        transportation;
    --  the 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;
    --  the Company's ability to successfully manage store growth and
        optimize the productivity and profitability of its store
        portfolio;
    --  the impact of a privacy breach and the resulting effect on the
        Company's business and reputation;
    --  the failure by independent manufacturers to comply with the
        Company's social compliance program requirements;
    --  the effect of general economic conditions on consumer spending
        and the Company's liquidity and capital resources;
    --  the effect of competitive pressures from other retailers;
    --  the 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;
    --  the Company's dependence on shopping malls and other retail
        centers to attract customers and the impact of potential
        consolidation of commercial and retail landlords on the
        Company's ability to negotiate favorable rental terms;
    --  the impact on the Company's stock price relating to the
        Company's level of sales and earnings growth;
    --  the Company's ability to realize its deferred tax assets;
    --  the effect of external economic factors on the Company's future
        funding obligations for its defined benefit pension plan; and
    --  the impact of climate change and extreme or unseasonable
        weather conditions 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 Six Months Ended August 3, 2013 and July 28, 2012

(unaudited)

Table 1
                         Quarter Ended         Six Months Ended
                         August 3,  July 28,   August 3,    July 28,
                         2013       2012       2013         2012
                         (in thousands, except per share amounts)

Net sales                $ 638,198  $ 594,872  $ 1,212,704  $ 1,155,283

Cost of sales            288,921    262,471    542,862      505,511

Gross margin             349,277    332,401    669,842      649,772

Selling, general and     289,298    279,456    575,951      551,474
administrative expenses

Operating income         59,979     52,945     93,891       98,298

Interest and investment  354        (384)      441          (164)
income/(expense), net

Other non-operating      143        -          197          -
income, net

Income before income     60,476     52,561     94,529       98,134
taxes

Income tax provision     24,827     21,826     37,968       38,667

Net income               $ 35,649   $ 30,735   $ 56,561     $ 59,467

Earnings per share:

Basic earnings per share $ 0.76     $ 0.64     $ 1.21       $ 1.23

Weighted average shares  45,695     47,571     45,887       47,747
outstanding

Diluted earnings per     $ 0.76     $ 0.63     $ 1.20       $ 1.21
share

Weighted average shares
outstanding, assuming    46,125     48,118     46,332       48,398
dilution

ANN INC

CONDENSED CONSOLIDATED BALANCE SHEETS

August 3, 2013, February 2, 2013 and July 28, 2012

(unaudited)

Table 2
                                  August 3,    February 2,  July 28,
                                  2013         2013         2012

Assets                            (in thousands, except share amounts)

Current assets

Cash                              $ 107,021    $ 167,011    $ 132,663

Accounts receivable               24,438       17,856       28,074

Merchandise inventories           247,269      216,848      221,634

Refundable income taxes           8,271        9,201        7,765

Deferred income taxes             28,358       30,397       32,122

Prepaid expenses and other        67,008       64,716       65,816
current assets

Total current assets              482,365      506,029      488,074

Property and equipment, net       423,850      409,703      374,803

Deferred income taxes             2,191        7,841        29,361

Other assets                      21,457       18,632       13,350

Total assets                      $ 929,863    $ 942,205    $ 905,588

Liabilities and Stockholders'
Equity

Current liabilities

Accounts payable                  $ 105,264    $ 105,691    $ 97,725

Accrued salaries and bonus        25,575       23,969       31,080

Current portion of long-term      19,181       34,233       29,750
performance compensation

Accrued tenancy                   38,312       38,647       45,258

Gift certificates and merchandise 37,873       47,268       41,518
credits redeemable

Accrued expenses and other        83,748       86,946       81,293
current liabilities

Total current liabilities         309,953      336,754      326,624

Deferred lease costs              165,027      162,620      158,450

Deferred income taxes             6,116        228          1,250

Long-term performance
compensation, less current        12,452       26,368       20,634
portion

Other liabilities                 34,842       31,125       30,455

Commitments and contingencies

Stockholders' equity

Common stock, $.0068 par value;
200,000,000 shares

authorized; 82,563,516 shares     561          561          561
issued

Additional paid-in capital        747,986      768,215      769,516

Retained earnings                 733,403      676,842      633,724

Accumulated other comprehensive   (4,729)      (4,497)      (5,123)
loss

Treasury stock, 36,730,220,
35,958,318 and

35,239,186 shares, respectively,  (1,075,748)  (1,056,011)  (1,030,503)
at cost

Total stockholders' equity        401,473      385,110      368,175

Total liabilities and             $ 929,863    $ 942,205    $ 905,588
stockholders' equity

ANN INC

Brand Sales and Store Data

For the Quarters and Six Months Ended August 3, 2013 and July 28, 2012

(unaudited)

Table 3
                           Quarter Ended

Sales and Comparable Sales August 3, 2013         July 28, 2012
                           Sales      Comp % (1)  Sales      Comp % (1)
                           ($ in thousands)

Ann Taylor brand

Ann Taylor (2)             $ 165,807  9.3   %     $ 151,689  7.8 %

Ann Taylor Factory         79,356     (7.2) %     81,586     2.1 %

Total Ann Taylor brand     $ 245,163  3.1   %     $ 233,275  5.6 %

LOFT brand

LOFT (3)                   $ 320,373  3.7   %     $ 300,489  5.0 %

LOFT Outlet                72,662     (3.2) %     61,108     0.3 %

Total LOFT brand           $ 393,035  2.5   %     $ 361,597  4.2 %

Total Company              $ 638,198  2.8   %     $ 594,872  4.7 %
                       Six Months Ended

Sales and Comparable   August 3, 2013           July 28, 2012
Sales
                       Sales        Comp % (1)  Sales        Comp % (1)
                       ($ in thousands)

Ann Taylor brand

Ann Taylor (2)         $ 316,590    7.8   %     $ 293,900    (1.9) %

Ann Taylor Factory     147,840      (6.6) %     151,751      1.5   %

Total Ann Taylor brand $ 464,430    2.6   %     $ 445,651    (0.8) %

LOFT brand

LOFT (3)               $ 618,870    1.5   %     $ 599,363    8.4   %

LOFT Outlet            129,404      (5.3) %     110,269      2.5   %

Total LOFT brand       $ 748,274    0.4   %     $ 709,632    7.5   %

Total Company          $ 1,212,704  1.2   %     $ 1,155,283  4.3   %
                             Quarter Ended

Stores and Square Footage    August 3, 2013        July 28, 2012
                             Stores  Square Feet   Stores  Square Feet
                             (square feet in thousands)

Ann Taylor brand

Ann Taylor                   275     1,373         277     1,419

Ann Taylor Factory           105     715           100     691

Total Ann Taylor brand       380     2,088         377     2,110

LOFT brand

LOFT                         525     3,015         505     2,929

LOFT Outlet                  102     685           80      555

Total LOFT brand             627     3,700         585     3,484

Total Company                1,007   5,788         962     5,594

Number of:

Stores open at beginning of  989     5,699         947     5,524
period

New stores                   21      111           17      97

Downsized/expanded stores,   -       (8)           -       (16)
net (4)

Closed stores                (3)     (14)          (2)     (11)

Stores open at end of period 1,007   5,788         962     5,594
                             Six Months Ended
                             August 3, 2013        July 28, 2012
                             Stores  Square Feet   Stores  Square Feet
                             (square feet in thousands)

Number of:

Stores open at beginning of  984     5,685         953     5,584
period

New stores                   34      177           24      133

Downsized/expanded stores,   -       (14)          -       (41)
net (5)

Closed stores                (11)    (60)          (15)    (82)

Stores open at end of period 1,007   5,788         962     5,594


A store is included in comparable sales in its thirteenth month of
(1) 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 Ann Taylor stores and anntaylor.com. 
(3) Includes sales at LOFT stores and LOFT.com. 
During the quarter ended August 3, 2013, we downsized four Ann
(4) Taylor stores and expanded one LOFT store. During the quarter ended 


    July 28, 2012, we downsized six Ann Taylor stores, one Ann Taylor
    Factory store and expanded one Ann Taylor store.
    During the six months ended August 3, 2013, we downsized six Ann


Taylor stores, one Ann Taylor Factory store and two LOFT stores and
(5) expanded one LOFT store. During the six months ended July 28, 2012, 


    we downsized nine Ann Taylor stores, four Ann Taylor Factory
    stores, one LOFT store and one LOFT Outlet store and expanded one
    Ann Taylor store.



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