Ann Taylor Posts Lofty Earnings, but Shares Drop

[Stocks-to-Watch]

Ann (ANN), the parent company of Ann Taylor, beat earnings expectations, but shares fell 6.2% in midday trading as sales at Ann Taylor stores dipped.

Ann posted 61 cents of EPS, 4 cents better than expectations, and same-store sales rose 5.5%. Gross margin rose 30 basis points to 57.5%.

Revenue came in at $564 million, slightly below the company’s own projection of $565 million. Same-store sales at the company’s Loft brand grew 7.9%. Ann Taylor stores saw same-store sales fall 5.8%, although they rose 2.5% when including direct-to-consumer sales.

Nomura analyst Paul Lejuez thinks Ann is on track to expand margins going forward.

“With Loft performing well and improvements at Ann Taylor stores, we believe that ANN is on the right track to achieve double-digit op margins over the next several years (vs. 7.6% this year).



Original Article Source by Barrons.com