ANN, Inc. (ANN) Cuts Q2 Outlook

ANN, Inc. (NYSE: ANN) updated its outlook for the fiscal second quarter of 2014, reflecting lower-than-anticipated comparable sales and gross margin rate performance.

Based on preliminary results, the update to the second quarter 2014 outlook provided on May 30, 2014 is as follows:

• Total Company net sales for the fiscal second quarter of 2014 are now expected to be $648 million (the Street is at $672.4 million), reflecting a comparable sales decline of 2.3%.
  • At the Ann Taylor brand, total comparable sales increased 0.7%, reflecting an increase of 2.0% at Ann Taylor partially offset by a decline of 1.9% in the Ann Taylor Factory channel.
  • At the LOFT brand, total comparable sales declined 4.1%, reflecting a decrease of 5.2% at LOFT and an increase of 0.3% in the LOFT Outlet channel.
• Gross margin rate for the Company is expected to be 52.4%.
• Selling, general and administrative expenses are expected to be $286 million.
• Total weighted average diluted shares outstanding for the second quarter are expected to be 46.9 million, which includes the effect of participating securities as well as the impact of 1.3 million shares repurchased during the fiscal second quarter.

Kay Krill, President and Chief Executive Officer, said, "Despite positive performance through mid-June, the remainder of the second quarter proved more challenging, with soft traffic across the industry and a highly promotional environment. While we delivered a positive comp for the quarter at Ann Taylor, we were disappointed in our performance at LOFT, which experienced continued softness in basic knit tops that represent a meaningful component of LOFT's summer assortment. We took action to move through summer product, which pressured gross margin but enabled us to end the quarter with clean inventories at both brands."

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