ANN INC. Reports Record Third Quarter 2013 EPS Results

- Comparable Sales for the Company Increased 4% - 
- Both Ann Taylor and LOFT Brands Deliver Positive Comparable Sales - 
- Company on Track to Deliver Record EPS for Fiscal Year 2013 - 
NEW YORK, Nov. 22, 2013 /CNW/ - ANN INC. (NYSE: ANN) today reported results 
for the fiscal third quarter of 2013, ended November 2, 2013.  The Company 
also provided its outlook for the fourth quarter and updated its outlook for 
the full year of fiscal 2013. 
For the fiscal third quarter of 2013, the Company reported record earnings per 
diluted share of $0.89, compared with earnings per diluted share of $0.84 in 
the third quarter of 2012.  Diluted earnings per share for the fiscal third 
quarter of 2012 included an $0.08 per share benefit related to the recognition 
of gift card and merchandise credit breakage.  Excluding the benefit, diluted 
earnings per share for the fiscal third quarter of 2012 was $0.76. 
Kay Krill, President and Chief Executive Officer, commented, "ANN INC. 
delivered outstanding performance this quarter.  Despite a challenging and 
highly promotional retail environment, we achieved a double-digit increase in 
earnings per share, excluding the effect of a one-time $0.08 benefit in the 
third quarter of last year.  Our bottom-line growth reflected higher sales, 
including mid-single digit comparable sales growth, a solid gross margin rate, 
continued disciplined management of expenses, as well as the benefit of share 
repurchase activity. 
"Among the highlights for the quarter, LOFT generated positive momentum on top 
of its strong performance last year. Our clients responded very well to the 
brand's fashionable assortment and exceptional value.  At Ann Taylor, we 
achieved continued success with our versatile wear-to-work offering, as well 
as our new shoe and jewelry collections.  This strong performance at Ann 
Taylor was partially offset by softness at Ann Taylor Factory. 
"Looking ahead, both brands have entered the fourth quarter in an excellent 
position, and our strategic growth initiatives continue to add value on both 
the top and bottom line.  We have now reported more than 90 percent of our 
anticipated annual earnings and are on track to deliver another consecutive 
year of record earnings per share," Ms. Krill concluded. 
Fiscal 2013 Third-Quarter Results 
Total net sales for the third quarter of fiscal 2013 were $657.5 million, an 
increase of 7% compared with total net sales of $612.5 million in the third 
quarter of fiscal 2012.  By brand, net sales across all channels of the Ann 
Taylor brand totaled $249.2 million in the third quarter of 2013, compared 
with net sales of $244.6 million in the third quarter of 2012.  At the LOFT 
brand, net sales across all channels were $408.4 million in the third quarter 
of 2013, compared with net sales of $368.0 million in the third quarter of 
2012. 
Total Company comparable sales for the quarter increased 3.7%, on top of an 
increase of 5.5% in the third quarter of 2012.  At Ann Taylor, total brand 
comparable sales increased 0.6%, reflecting an increase of 4.4% at Ann Taylor, 
which includes sales results at both Ann Taylor stores and anntaylor.com, and 
a decline of 6.9% in the Ann Taylor Factory channel.  At LOFT, total brand 
comparable sales were up 5.6%, reflecting an increase of 6.3% at LOFT, which 
includes sales results at both LOFT stores and LOFT.com, and an increase of 
1.8% 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 55.7%, compared with the 57.9% 
gross margin rate achieved in the third quarter of 2012. The gross margin 
performance in the third quarter of 2013 primarily reflected the impact of a 
highly competitive promotional environment. 
Selling, general and administrative expenses for the third quarter of 2013 
were $295.8 million versus $287.5 million reported in the third quarter of 
2012.  As a percentage of net sales, selling, general and administrative 
expenses improved 190 basis points to 45.0% compared to the third quarter 2012 
rate of 46.9%.  The improvement in SG&A rate during the third quarter of 2013 
primarily reflected fixed cost leveraging resulting from higher net sales and 
lower performance-based compensation expense, 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 $70.4 million in the third quarter of 
2013, compared with operating income of $66.9 million in the third quarter of 
2012.  Net income was $41.2 million in the third quarter of 2013, versus the 
$40.7 million reported in the third quarter of 2012.  Diluted earnings per 
share was $0.89, compared with $0.84 in the third quarter of 2012.  Diluted 
earnings per share for the fiscal third quarter of 2012 included a one-time 
$0.08 per share benefit related to the recognition of gift card and 
merchandise credit breakage, without which, diluted earnings per share was 
$0.76. 
The Company ended the quarter with approximately $119 million in cash. 
Total inventory per square foot at the end of the third quarter increased 
approximately 8% versus year-ago, reflecting increases of 1% at Ann Taylor, 
14% at LOFT and 10% 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 third quarter of fiscal 2013, the Company opened 20 stores, 
comprised of one Ann Taylor store, one Ann Taylor Factory store, 12 LOFT 
stores and six LOFT Outlet stores.  The Company did not close any stores 
during the quarter.  The total store count at the end of the fiscal third 
quarter was 1,027, comprised of 276 Ann Taylor stores, 106 Ann Taylor Factory 
stores, 537 LOFT stores, and 108 LOFT Outlet stores. 
Fiscal 2013 Nine-Month Results 
Net sales for the first nine months of fiscal 2013 were $1.9 billion, compared 
with net sales of $1.8 billion in the first nine months of fiscal 2012.  By 
brand, net sales across all channels of the Ann Taylor brand were $713.6 
million in the first nine months of 2013, compared with net sales of $690.2 
million in the first nine months of 2012.  At the LOFT brand, net sales across 
all channels were $1,156.6 million in the first nine months of 2013, compared 
with net sales of $1,077.6 million in the first nine months of 2012. 
Total Company comparable sales for the first nine months of 2013 increased 
2.0%, on top of an increase of 4.7% in the comparable period of 2012.  At Ann 
Taylor, total brand comparable sales increased 1.9%, including an increase of 
6.6% at Ann Taylor, partially offset by a decrease of 6.7% in the Ann Taylor 
Factory channel.  At LOFT, total brand comparable sales increased 2.1%, 
including increases of 3.1% at LOFT, partially offset by a decrease of 2.8% 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 55.4% in the first nine months 
of 2013, compared with 56.8% in the first nine months of 2012. 
Selling, general and administrative expenses for the first nine months of 2013 
were $871.8 million, versus $839.0 million in the first nine months of 2012.  
As a percentage of net sales, selling, general and administrative expenses 
improved 90 basis points versus the prior year to 46.6%. 
The Company reported operating income of $164.3 million in the first nine 
months of 2013, compared with operating income of $165.2 million in the first 
nine months of 2012.  Net income was $97.8 million in the first nine months of 
2013, versus the $100.2 million reported for the first nine months of 2012.  
Diluted earnings per share in the first nine months of 2013 was $2.08, 
compared with $2.05 per diluted share reported in the first nine months of 
2012. 
Outlook for Fiscal Fourth Quarter and Full Year 2013 
For the fiscal fourth quarter of 2013, the Company expects total net sales to 
be $640 million, reflecting a total Company comparable sales increase in the 
mid-single digits.  Gross margin rate performance is expected to be 49.5%.  
Selling, general and administrative expenses are estimated to be $305 million. 
In terms of the full year, the Company currently expects: 


    --  Fiscal 2013 total net sales to be $2.510 billion, reflecting a
        total Company comparable sales increase in the
        low-to-mid-single digits;
    --  gross margin rate performance to be 53.9%;
    --  total SG&A expenses to be $1.177 billion;
    --  the Company's effective tax rate to be 41%; and,
    --  capital expenditures to be approximately $155 million.
    --  Total weighted average square footage for fiscal 2013 is
        expected to increase approximately 3%, reflecting the opening
        of 66 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 November 2, 
2013, the Company operated 1,027 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 effect of competitive pressures from other retailers;
    --  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 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;
    --  the impact of fluctuations in sourcing costs, in particular,
        increases in the costs of raw materials, labor, fuel and
        transportation;
    --  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 Company's ability to successfully execute brand goals,
        objectives and new concepts and strategies, including
        international expansion;
    --  the Company's ability to secure and protect trademarks and
        other intellectual property rights;
    --  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 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 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 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 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 Nine Months Ended November 2, 2013 and October 27,
2012

(unaudited)

Table 1.
                   Quarter Ended             Nine Months Ended
                   November 2,  October 27,  November 2,   October 27,
                   2013         2012         2013          2012
                   (in thousands, except per share amounts)

Net sales          $ 657,532    $ 612,548    $ 1,870,236   $ 1,767,831

Cost of sales      291,312      258,149      834,174       763,660

Gross margin       366,220      354,399      1,036,062     1,004,171

Selling, general
and administrative 295,813      287,480      871,764       838,954
expenses

Operating income   70,407       66,919       164,298       165,217

Interest and
investment income/ (224)        9            217           (155)
(expense), net

Other
non-operating      (140)        (24)         57            (24)
income/(expense),
net

Income before      70,043       66,904       164,572       165,038
income taxes

Income tax         28,854       26,156       66,822        64,823
provision

Net income         $ 41,189     $ 40,748     $ 97,750      $ 100,215

Earnings per
share:

Basic earnings per $ 0.90       $ 0.85       $ 2.10        $ 2.07
share

Weighted average   44,967       47,422       45,581        47,638
shares outstanding

Diluted earnings   $ 0.89       $ 0.84       $ 2.08        $ 2.05
per share

Weighted average
shares             45,443       47,973       46,036        48,256
outstanding,
assuming dilution

ANN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

November 2, 2013, February 2, 2013 and October 27, 2012

(unaudited)

Table 2.
                               November 2,   February 2,   October 27,
                               2013          2013          2012
                               (in thousands, except share amounts)

Assets

Current assets

Cash                           $ 118,692     $ 167,011     $ 166,532

Accounts receivable            36,612        17,856        30,873

Merchandise inventories        302,395       216,848       270,385

Refundable income taxes        7,365         9,201         10,179

Deferred income taxes          30,638        30,397        34,933

Prepaid expenses and other     67,752        64,716        66,611
current assets

Total current assets           563,454       506,029       579,513

Property and equipment, net    445,541       409,703       412,626

Deferred income taxes          2,335         7,841         17,027

Other assets                   22,308        18,632        15,073

Total assets                   $ 1,033,638   $ 942,205     $ 1,024,239

Liabilities and Stockholders'
Equity

Current liabilities

Accounts payable               $ 123,257     $ 105,691     $ 120,303

Accrued salaries and bonus     20,837        23,969        25,862

Current portion of long-term   19,945        34,233        32,069
performance compensation

Accrued tenancy                40,529        38,647        46,419

Gift certificates and          35,890        47,268        34,147
merchandise credits redeemable

Accrued expenses and other     117,334       86,946        101,071
current liabilities

Total current liabilities      357,792       336,754       359,871

Deferred lease costs           170,221       162,620       162,092

Deferred income taxes          3,361         228           402

Long-term performance
compensation, less current     14,295        26,368        24,777
portion

Other liabilities              38,648        31,125        28,669

Commitments and contingencies

Stockholders' equity

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


                           561           561           561
authorized; 82,563,516 shares
issued 
Additional paid-in capital     750,934       768,215       776,388 
Retained earnings              774,592       676,842       674,473 
Accumulated other              (4,600)       (4,497)       (4,816)
comprehensive loss 
Treasury stock, 36,642,644;
35,958,318 and 34,192,540      (1,072,166)   (1,056,011)   (998,178) 
shares, respectively, at cost 
Total stockholders' equity     449,321       385,110       448,428 
Total liabilities and          $ 1,033,638   $ 942,205     $ 1,024,239
stockholders' equity 
ANN INC 
Brand Sales and Store Data 
For the Quarters and Nine Months Ended November 2, 2013 and October 27,
2012 
(unaudited) 
Table 3 


                     Quarter Ended

Sales and Comparable November 2, 2013          October 27, 2012
Sales
                     Sales         Comp % (1)  Sales         Comp % (1)
                     ($ in thousands)

Ann Taylor brand

Ann Taylor (2)       $ 172,172     4.4    %    $ 165,906     5.6    %

Ann Taylor Factory   77,003        (6.9)%      78,649        1.7    %

Total Ann Taylor     $ 249,175     0.6    %    $ 244,555     4.3    %
brand

LOFT brand

LOFT (3)             $ 336,874     6.3    %    $ 307,736     8.0    %

LOFT Outlet          71,483        1.8    %    60,257        (3.0)%

Total LOFT brand     $ 408,357     5.6    %    $ 367,993     6.2    %

Total Company        $ 657,532     3.7    %    $ 612,548     5.5    %
                     Nine Months Ended

Sales and Comparable November 2, 2013          October 27, 2012
Sales
                     Sales         Comp % (1)  Sales         Comp % (1)
                     ($ in thousands)

Ann Taylor brand

Ann Taylor (2)       $ 488,762     6.6    %    $ 459,806     0.6    %

Ann Taylor Factory   224,843       (6.7)%      230,400       1.5    %

Total Ann Taylor     $ 713,605     1.9    %    $ 690,206     0.9    %
brand

LOFT brand

LOFT (3)             $ 955,744     3.1    %    $ 907,099     8.2    %

LOFT Outlet          200,887       (2.8)%      170,526       0.4    %

Total LOFT brand     $ 1,156,631   2.1    %    $ 1,077,625   7.1    %

Total Company        $ 1,870,236   2.0    %    $ 1,767,831   4.7    %
                           Quarter Ended

Stores and Square Footage  November 2, 2013       October 27, 2012
                           Stores    Square Feet  Stores    Square Feet
                           (square feet in thousands)

Ann Taylor brand

Ann Taylor                 276       1,371        278       1,414

Ann Taylor Factory         106       721          101       697

Total Ann Taylor brand     382       2,092        379       2,111

LOFT brand

LOFT                       537       3,073        510       2,948

LOFT Outlet                108       719          92        627

Total LOFT brand           645       3,792        602       3,575

Total Company              1,027     5,884        981       5,686

Number of:

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

New stores                 20        104          25        134

Downsized/expanded stores, —   (8)          —   (13)
net (4)

Closed stores              —   —      (6)       (29)

Stores open at end of      1,027     5,884        981       5,686
period
                           Nine Months Ended
                           November 2, 2013       October 27, 2012
                           Stores    Square Feet  Stores    Square Feet
                           (square feet in thousands)

Number of:

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

New stores                 54        281          49        267

Downsized/expanded stores, —   (22)         —   (54)
net (5)

Closed stores              (11)      (60)         (21)      (111)

Stores open at end of      1,027     5,884        981       5,686
period

 _____________________________________________________________________
|   |A store is included in comparable sales in its thirteenth month  |
|(1)|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 Ann Taylor stores and anntaylor.com.           |
|___|_________________________________________________________________|
|(3)|Includes sales at LOFT stores and LOFT.com.                      |
|___|_________________________________________________________________|
|   |During the quarter ended November 2, 2013, we downsized three Ann|
|   |Taylor stores, three LOFT stores and expanded one LOFT store.    |
|(4)|During the quarter ended October 27, 2012, we downsized five Ann |
|   |Taylor stores and three LOFT stores and expanded one Ann Taylor  |
|   |store and one LOFT store.                                        |
|___|_________________________________________________________________|
|   |During the nine months ended November 2, 2013, we downsized nine |
|   |Ann Taylor stores, one Ann Taylor Factory store and five LOFT    |
|(5)|stores and expanded two LOFT stores. During the nine months ended|
|   |October 27, 2012, we 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.           |
|___|_________________________________________________________________|



SOURCE  ANN INC. 
Investor Contact: Judith Lord, Vice President, Investor Relations, ANN INC., 
212-541-3300 ext. 3598; Press Contact: Catherine Fisher, Vice President, 
Corporate Communications, ANN INC., 212-541-3300 ext. 2199 
http://www.anntaylor.com 
To view this news release in HTML formatting, please use the following URL: 
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CO: ANN INC.
ST: New York
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-0- Nov/22/2013 12:46 GMT
 
 
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