ANN INC. Reports Record Third Quarter 2013 EPS Results

            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 -

PR Newswire

NEW YORK, Nov. 22, 2013

NEW YORK, Nov. 22, 2013 /PRNewswire/ --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:

  oFiscal 2013 total net sales to be $2.510 billion, reflecting a total
    Company comparable sales increase in the low-to-mid-single digits;
  ogross margin rate performance to be 53.9%;
  ototal SG&A expenses to be $1.177 billion;
  othe Company's effective tax rate to be 41%; and,
  ocapital expenditures to be approximately $155 million.
  oTotal 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:

  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, its ability to maintain the value of its brands and engage new
    and existing clients;
  othe effect of competitive pressures from other retailers;
  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 performance and operation of the Company's websites and the risks
    associated with Internet sales;
  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 impact of fluctuations in sourcing costs, in particular, increases in
    the costs of raw materials, labor, fuel and transportation;
  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 successfully execute brand goals, objectives and
    new concepts and strategies, including international expansion;
  othe Company's ability to secure and protect trademarks and other
    intellectual property rights;
  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 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 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;
  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;
  othe failure by independent manufacturers to comply with the Company's
    social compliance program requirements;
  othe effect of general economic conditions on consumer spending and 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;
  othe 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;
  othe impact on the Company's stock price relating to the Company's level of
    sales and earnings growth;
  othe Company's ability to realize its deferred tax assets;
  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 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
                          November2,  October27,  November2,   October27,
                          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      295,813      287,480      871,764       838,954
administrative expenses
Operating income          70,407       66,919       164,298       165,217
Interest and investment   (224)        9            217           (155)
income/(expense), net
Other non-operating       (140)        (24)         57            (24)
income/(expense), net
Income before income      70,043       66,904       164,572       165,038
taxes
Income tax provision      28,854       26,156       66,822        64,823
Net income                $  41,189    $  40,748    $ 97,750      $ 100,215
Earnings per share:
Basic earnings per share  $  0.90      $  0.85      $ 2.10        $ 2.07
Weighted average shares   44,967       47,422       45,581        47,638
outstanding
Diluted earnings per      $  0.89      $  0.84      $ 2.08        $ 2.05
share
Weighted average shares
outstanding, assuming     45,443       47,973       46,036        48,256
dilution



ANN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(unaudited)
Table 2.
                                      November2,   February2,   October27,
                                      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 current    67,752        64,716        66,611
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 merchandise     35,890        47,268        34,147
credits redeemable
Accrued expenses and other current    117,334       86,946        101,071
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,   14,295        26,368        24,777
less current 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 comprehensive loss  (4,600)       (4,497)       (4,816)
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 stockholders'   $ 1,033,638   $  942,205    $ 1,024,239
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 Sales November2, 2013          October27, 2012
                           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 brand     $ 249,175     0.6     %   $ 244,555     4.3     %
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 Sales November2, 2013          October27, 2012
                           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 brand     $ 713,605     1.9     %   $ 690,206     0.9     %
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          November2, 2013     October27, 2012
                                   Stores  SquareFeet  Stores  SquareFeet
                                   (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 of period 1,007   5,788        962     5,594
New stores                         20      104          25      134
Downsized/expanded stores, net (4) —       (8)          —       (13)
Closed stores                      —       —            (6)     (29)
Stores open at end of period       1,027   5,884        981     5,686
                                   Nine Months Ended
                                   November2, 2013     October27, 2012
                                   Stores  SquareFeet  Stores  SquareFeet
                                   (square feet in thousands)
Number of:
Stores open at beginning of period 984     5,685        953     5,584
New stores                         54      281          49      267
Downsized/expanded stores, net (5) —       (22)         —       (54)
Closed stores                      (11)    (60)         (21)    (111)
Stores open at end of period       1,027   5,884        981     5,686



    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 November2, 2013, we downsized three Ann Taylor
(4) stores, three LOFT stores and expanded one LOFT store. During the quarter
    ended October27, 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 November2, 2013, we downsized nine Ann
    Taylor stores, one Ann Taylor Factory store and five LOFT stores and
(5) expanded two LOFT stores. During the nine months ended October27, 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.

Website: http://www.anntaylor.com
Contact: 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
 
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