Women’s apparel marketer Ann Taylor Stores Corp. generated $470.2 million during second quarter 2009, a drop from the $592.3 million it pulled in during second quarter 2008.
The company kept its cost of sales to 47.6% of its revenue in both quarters. But its selling, general and administrative costs ballooned from 44% of revenue a year ago to 51%. And that was before the company incurred $31.1 million in restructuring charges during the most recent quarter, compared with $3.1 million in restructuring costs a year ago.
All this added up to a $18 million net loss for the company, compared with $29.3 million in net income during second-quarter 2008. The most recent quarter ended Aug. 1.
What is the company doing to combat this? Getting aggressive with its direct marketing strategy, especially in light of its three-year quest to close 190 stores. It has already shut 72, and plans to close three more during the third quarter, 35 in the fourth quarter, and 80 in 2010.
To offset this, it is launching a fall advertising campaign which will include “expanding our client ourreach through e-mail, direct mail and in-store events,” president and CEO Kay Krill said during an earnings conference.
Additionally, its Internet business “achieved an improvement in its gross margin rate compared to the prior year and experienced steady traffic growth,” Krill added, according to a call transcript from Seeking Alpha.
“This channel has been successful with online exclusives…and we will continue to pursue opportunities to broaden the offerings online,” Krill said. “We are looking forward to September when we will be launching a fresh new look for both the Ann Taylor and [co-retail concept] LOFT Web sites.”
The Eavesdropper’s Take: Ann Taylor doesn’t specifically break out its factory and direct sales figures. But according to the company’s financial press release, the Ann Taylor retail line appears to have generated $108.9 million and its LOFT retail operations pulled in $250.5 million, leaving $175.6 million, presumably for factory and direct. What makes this interesting is one analyst’s comment on the earnings call “So it looks like for the first time the factory and direct business did more revenues than the Ann Taylor stores division.” Now, this could be the result of more bargain shoppers at its factory outlets. But one hopes its direct marketing ducks are in order, as this company seems to be increasing the importance of long-distance sales…
