Q1 2013 Earnings Call Transcript

Transcript Call Date 06/06/2013

Operator: Good morning, ladies and gentlemen and welcome to ANN, Inc's First Quarter 2013 Earnings Conference Call. At the request of the Company, today's conference call is being recorded. If you have any objections, you may disconnect at this time. Following the prepared remarks by the Company, you will have the opportunity to ask questions.

I would now like to turn the call over to Judy Lord, Vice President, Investor Relations. Please go ahead.

Judith Lord - VP, IR: Thank you, Harlan. Good morning, everyone. We are very pleased you could join us to review our results for the first quarter of fiscal 2013. I am here with Kay Krill, ANN INC's President and CEO; and Mike Nicholson, our Chief Operating Officer and CFO. Kay will begin with an overview of the quarter and provide a brief update on our strategic initiatives. Mike will then discuss our financial results and outlook, after that we'll open it up for questions.

Before turning it over to Kay, we would like to remind you that our discussion this morning includes forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's current expectations as of June 06, 2013, concerning future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially.

With that, I'd like to hand it over to Kay.

Kay Krill - President and CEO: Good morning, everyone. Thanks for joining us to review ANN Inc's results for the first quarter of 2013. As we reported this morning, our results for the quarter was slightly better than the outlook we provided a few weeks ago. To recap. Sales in the quarter were $575 million. Comparable sales for the Company were down 0.5% from the first quarter of last year, reflecting an increase of 1.9% for the Ann Taylor brand and a decrease of 1.9% for the LOFT brand.

Gross margin rate for the quarter was 55.8%, on the bottom line EPS was $0.44 per diluted share. There is no question that the cold unseasonable conditions during the first quarter had a significant impact on our business primarily at LOFT our offering featured a greater breadth and depth of warm weather product categories such as shorts, crop pants and knit tops.

You may recall that these categories were standouts last year when they benefited from the unseasonably warm spring at that time and drove an 11% comp increase for LOFT in the first quarter of 2012.

With the arrival of more seasonable temperatures in late April this year sales trends accelerated at both businesses and that has continued. In fact I'm very pleased that we achieved positive comps at both brands and in all channels for the month of May and we are on track to deliver higher profitability compared with the second quarter of 2012. As well as positive comp performance at both brands for the second quarter of 2013.

Let's now take a closer look at the brands. First Ann Taylor, for the first quarter Ann Taylor continued to deliver strong year-on-year performance. We are particularly pleased with the continued improvement in gross margin rate, which was up significantly from last year's first quarter.

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