AnnTaylor Stores reported preliminary, unaudited financial results for the fourth quarter and fiscal year 2004, which ended January 29, 2005.
Results for fourth quarter 2003 and fiscal year 2003, which ended January 31, 2004, have been restated in connection with the Company’s review of lease accounting transactions.
For the fourth quarter ended January 29, 2005, the Company recorded a preliminary net loss of $12,468,000, or $0.18 per share on a diluted basis (on an average of 70.7 million shares outstanding), compared to net income of $31,751,000, or $0.43 per share on a diluted basis (on an average of 74.6 million shares outstanding) for the fourth quarter ended January 31, 2004. Fourth quarter 2004 results include previously announced charges of approximately $3.0 million, or $0.03 per share on a diluted basis, associated with severance and approximately $7.0 million, or $0.06 per share on a diluted basis, related to the recording of rent expense with respect to its corporate office space at Times Square Tower in New York City. In addition, the fourth quarter 2004 results include approximately $2.7 million, or $0.02 per share on a diluted basis, of additional pension expense. Since the impact of the adjustment to each of the prior-period financial statements was not material, the Company recorded this catch-up pension adjustment, which is subject to final review and audit, in the fourth quarter of fiscal 2004. Fiscal 2003 fourth quarter earnings per share and shares outstanding have been restated for the effect of the 3-for-2 stock split that occurred in May 2004.
As previously reported, total net sales for the fourth quarter of fiscal 2004 were $487,338,000, up 8.6 percent from $448,677,000 for the same period last year. By division, fourth quarter net sales were $220,165,000 for Ann Taylor, compared to $243,414,000 for the same period last year, and $217,181,000 for Ann Taylor LOFT, compared to $171,847,000 for the same period last year. Comparable store sales for the fourth quarter of fiscal 2004 decreased 4.0 percent, compared to a 15.5 percent increase last year. By division, comparable store sales for the quarter were down 10.1 percent for Ann Taylor compared to a 14.4 percent increase last year, and up 3.2 percent for Ann Taylor LOFT compared to a 20.0 percent increase last year.
Gross margin, as a percentage of net sales, decreased to 43.0 percent in the fourth quarter of fiscal 2004, compared to 54.8 percent in the fourth quarter of fiscal 2003. The decrease in gross margin as a percentage of net sales is due to a combination of higher average unit costs, lower full price sales and lower margin rates achieved on both full-price and non-full price sales, particularly at Ann Taylor.
Selling, general and administrative expenses during the fourth quarter of fiscal 2004 were $230,867,000, or 47.4 percent of net sales, compared to $191,588,000, or 42.7 percent of net sales, for the same period last year. The increase in selling, general and administrative expenses as a percentage of net sales was primarily due to higher tenancy, marketing, severance and pension costs partially offset by a decrease in the provision for management performance bonuses.
The Company posted a preliminary operating loss of $21,523,000, or 4.4 percent of net sales in the fourth quarter of fiscal 2004, compared to operating income of $54,305,000, or 12.1 percent of net sales in the fourth quarter of last year.
During the fiscal fourth quarter, the Company opened four Ann Taylor stores and ten Ann Taylor LOFT stores. Additionally, three existing Ann Taylor stores were closed. The total store count at the end of the fourth quarter was 738, comprised of 359 Ann Taylor stores, 343 Ann Taylor LOFT stores, and 36 Ann Taylor Factory stores.
Total store square footage increased 14.7 percent to 4,202,000 square feet as of January 29, 2005, from 3,662,000 square feet as of January 31, 2004. Total square footage by division at the end of the fourth quarter was 1,885,000 square feet for Ann Taylor and 2,005,000 square feet for Ann Taylor LOFT.
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