Ann Inc. (ANN) lowered its outlook for the fiscal first quarter,
pointing to its weaker-than-anticipated performance and increased
promotions, particularly at its Loft chain.
"In light of the unseasonably cold weather this spring, we were
more promotional than planned in order to move through warm-weather
product categories, particularly at Loft," Chief Executive Kay
Krill said.
However, the women's apparel retailer, which operates the Ann
Taylor and more casual Loft chains, also said it entered the second
quarter with clean inventories and is well-positioned with fresh
new fashion at both brands.
"We are pleased to note that sales have improved since late
April with the arrival of more seasonable temperatures, resulting
in positive comparable sales at both brands," Ms. Krill said.
Ann has previously said it made some fashion misfires, like
bright colors, that didn't resonate with customers last fiscal
year, pressuring results.
Ann expects net sales of $575 million for the quarter ended last
month, with same-store sales falling 0.5%. In March, it guided for
$600 million in sales on a same-store sales increase in the
low-single digits.
By brand, same-store sales increased 1.9% at Ann Taylor, while
falling 1.9% at Loft. The company expects gross margin to be 55.8%,
reflecting higher-than-expected promotions, primarily at Loft. It
previously guided for 56.5%.
"From a comparable sales standpoint, LOFT's
softer-than-anticipated performance reflected the breadth and depth
of its warm-weather offering, combined with a challenging
comparison," Ms. Krill said.
In factory outlet centers, the company said soft traffic
continued to pressure same-store sales at both Ann Taylor Factory
and Loft Outlet stores, although margins remained strong in these
channels.
Shares of the company, which is slated to report results June 6,
dropped 20 cents premarket to $30.01 and have fallen 11% so far
this year.
Write to Lauren Pollock at lauren.pollock@dowjones.com
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