netrashetty
Netra Shetty
Ann Taylor (NYSE: ANN) is an American group of specialty apparel retail chain stores for women, headquartered in New York City, (7 Times Square Tower, New York, NY 10036). The stores offer classic styled suits, separates, dresses, shoes and accessories. The brand is marketed under four divisions, Ann Taylor, LOFT (formerly Ann Taylor LOFT), Ann Taylor Factory and LOFT Outlet.
Richard Liebeskind, the founder of Ann Taylor Stores Corp., opened his first store in 1954. The first Ann Taylor store (Store 0001) was opened two years later in New Haven, Connecticut. "Ann Taylor" was the name of a best-selling dress at the founder's father's store. Both the best-selling dress and the name "Ann Taylor" were given from the father to his son, Richard Liebeskind [3], for good luck. [4] Liebeskind decided to go with the name Ann Taylor because "Ann" was considered a very New England name, and "Taylor" evoked the image of tailored clothing. The name created the ideal identity of classic woman's apparel.
As of the end of fiscal 2008, Ann Taylor had 935 stores consisting of 320 Ann Taylor stores, 510 LOFT stores, 91 Ann Taylor Factory stores, and 14 LOFT Outlet stores.[5] Total revenue was $2.4 billion, of which $1.09 billion came from the company's Ann Taylor Loft division, $689 million from Ann Taylor, and $417 million from Ann Taylor Factory Store
Ann Taylor Stores (NYSE: ANN) sells women's clothing in the United States and Puerto Rico under the names Ann Taylor, Ann Taylor LOFT, and Ann Taylor Factory Store. Through its various brands, the company seeks to provide busy women with an all inclusive shopping experience. The namesake brand focuses on meeting women's professional attire needs, while the LOFT store focuses on casual attire. In fiscal 2009, the LOFT division made up 51% of net sales, the Ann Taylor division made up 25%, and the Ann Taylor Factory Store made up the remaining 24%.[1] The Ann Taylor brands compete against other retailers such as The Gap and Limited Brands.
In recent years, ANN's performance has been quite erratic. A lack of proper controls has often led to excess inventory and heavy discounting. Under the present leadership, ANN has sought to exercise better inventory oversight while repositioning its brands as full-priced destinations. As the company's main brands, Ann Taylor and Ann Taylor Loft approach market saturation, the company will be forced to develop new concepts in order to maintain acceptable growth.
Company Overview
Ann Taylor has reinvested more in building its store base, mostly for the Loft stores, over the past few years. This contributed substantially to the double-digit sales growth that the company has sustained since that turn-around.
Business Segments
ANN operates in one aggregate business segment, though sells products under three businesses.[2]
Ann Taylor (25% of 2009 net sales)
Contents
1 Company Overview
1.1 Business Segments
1.1.1 Ann Taylor (25% of 2009 net sales)
1.1.2 LOFT (49% of 2009 net sales)
1.2 Business Financials
1.2.1 Fiscal Year 2009 Performance
1.2.2 Q1 FY 2010 (ended May 1st, 2010)
1.2.3 Q2 FY 2010 (ended July 31, 2010)
1.2.4 Q3 Fiscal 2010 (ended October 30th, 2010)
2 Key Trends and Forces
2.1 "Almost-luxury" Brands Hurt by 2008-2009 U.S. Recession
2.2 Increasing Production Costs Pressure ANN Margins
2.3 Reaching Market Saturation
3 Competition
4 References
The Ann Taylor brand sells women's fashion attire and accessories. From FY 2008 to FY 2009, the Ann Taylor business net sales decreased 33.8%.[1]
LOFT (49% of 2009 net sales)
The LOFT brand sells casual attire and accessories for 15-30 year old women. From FY 2008 to FY 2009, the LOFT business net sales decreased 13.7%.[1]
Business Financials
Fiscal Year 2009 Performance
Ann Taylor, a mid-luxury firm, continued to struggle in 2009 from the 2008 Financial Crisis. Like Abercrombie & Fitch and J Crew, ANN is a "near luxury" retailer, so many of its customers will look for more affordable alternatives during harsh economic conditions. As such, ANN had a net income loss of $333 million in FY 2009.[2]
Q1 FY 2010 (ended May 1st, 2010)
For the quarter, ANN posted net sales of $476.2 million -- an 11.6% increase from Q1 FY 2010.[3]
ANN had comparable store sales growth of 14.1% from Q1 FY 2009, driven by a 50.7% increase in e-commerce sales.[3]
The strong sales performance let to net income of $22.616 million, compared to a net loss of $2.314 million in Q1 FY 2009.[3]
Due to its prosperity, ANN increased its SG&A expenses from $238.6 million to $243.8 million.[3]
Q2 FY 2010 (ended July 31, 2010)
ANN reported net sales of $483.5 million, a 2.8% increase compared to Q2 fiscal 2009.[4]
Comparable store sales increased 6.1%, compared to a decrease of 22.4% in Q2 fiscal 2009.[4]
The Ann Taylor business posted net sales of $207.2 million, an 8% increase compared to Q2 fiscal 2009.[4] The LOFT business posted net sales of $276.2 million, a 1% decrease compared to Q2 fiscal 2009.[4]
ANN reported net income of $19.1 million ($0.32 per diluted share, compared with net income of $3.6 million in Q2 fiscal 2009.[4]
Q3 Fiscal 2010 (ended October 30th, 2010)
ANN posted net sales of $505 million for the quarter, a 9.3% increase compared to Q3 fiscal 2009.[5]
Comparable store sales increased 12% from Q3 fiscal 2009.[5] Per segment, the Ann Taylor brand comparable store sales increased 22% and LOFT brand increasing 5%.[5]
Due to better cost management, ANN net income for the quarter increased ten-fold, from $2.1 million in Q3 fiscal 2009 to $24.2 million.[5]
Financials FY2006 FY2007 FY2008 FY2009
Gross Sales ($Mil) $2,343 $2,396 $2,194 $1,828
Net Income ($Mil) $142.98 $97.23 $(18.208) $(338.906)
Comp Same Store Sales 0.1% 2.8% 3.3% (17.8%)
Sales Per Square Foot $461 $474 $457 $402
[2]
Key Trends and Forces
"Almost-luxury" Brands Hurt by 2008-2009 U.S. Recession
Consumer spending on near luxury goods such as ANN products is discretionary in nature. In times of economic recession consumer's quickly decrease expenditure on non-necessities like cashmere fleeces. In 2007, both the real estate and credit markets were severely affected by the subprime lending crises. Consumers faced with an inability to draw on equity in their home to fund purchases and a tougher overall credit market were in many instances "forced" to spend less on clothing. Additionally, other economic factors like the price of oil which approached the $100 mark near the end of 2007, can further decrease disposable income available for discretionary purchases. Under such conditions, consumers to who do purchase clothing tend to skew their purchases toward lower end retailers.
Increasing Production Costs Pressure ANN Margins
Ann Taylor had a successful 2009 rebound from the 2008 U.S. Recession, as its shares increased 220% to pre-crisis levels.[6] ANN was able to have a good rebound because it lowered its EBITDA margin, which is used to measure the firm's profitability based on its capital expenditures and investment decisions. In mid-2010, however, ANN's margins have been pressured by rising production costs.
Ann Taylor is especially wary of its dependence on China, as 50% of the retailer's products are sourced from there.[6] With China's June announcement that it will consider de-pegging the Yuan, rising producer price inflation levels (which hit a high of 7.2% in May 2010)[6] will pressure ANN to pass on production costs to consumers through higher prices.
Richard Liebeskind, the founder of Ann Taylor Stores Corp., opened his first store in 1954. The first Ann Taylor store (Store 0001) was opened two years later in New Haven, Connecticut. "Ann Taylor" was the name of a best-selling dress at the founder's father's store. Both the best-selling dress and the name "Ann Taylor" were given from the father to his son, Richard Liebeskind [3], for good luck. [4] Liebeskind decided to go with the name Ann Taylor because "Ann" was considered a very New England name, and "Taylor" evoked the image of tailored clothing. The name created the ideal identity of classic woman's apparel.
As of the end of fiscal 2008, Ann Taylor had 935 stores consisting of 320 Ann Taylor stores, 510 LOFT stores, 91 Ann Taylor Factory stores, and 14 LOFT Outlet stores.[5] Total revenue was $2.4 billion, of which $1.09 billion came from the company's Ann Taylor Loft division, $689 million from Ann Taylor, and $417 million from Ann Taylor Factory Store
Ann Taylor Stores (NYSE: ANN) sells women's clothing in the United States and Puerto Rico under the names Ann Taylor, Ann Taylor LOFT, and Ann Taylor Factory Store. Through its various brands, the company seeks to provide busy women with an all inclusive shopping experience. The namesake brand focuses on meeting women's professional attire needs, while the LOFT store focuses on casual attire. In fiscal 2009, the LOFT division made up 51% of net sales, the Ann Taylor division made up 25%, and the Ann Taylor Factory Store made up the remaining 24%.[1] The Ann Taylor brands compete against other retailers such as The Gap and Limited Brands.
In recent years, ANN's performance has been quite erratic. A lack of proper controls has often led to excess inventory and heavy discounting. Under the present leadership, ANN has sought to exercise better inventory oversight while repositioning its brands as full-priced destinations. As the company's main brands, Ann Taylor and Ann Taylor Loft approach market saturation, the company will be forced to develop new concepts in order to maintain acceptable growth.
Company Overview
Ann Taylor has reinvested more in building its store base, mostly for the Loft stores, over the past few years. This contributed substantially to the double-digit sales growth that the company has sustained since that turn-around.
Business Segments
ANN operates in one aggregate business segment, though sells products under three businesses.[2]
Ann Taylor (25% of 2009 net sales)
Contents
1 Company Overview
1.1 Business Segments
1.1.1 Ann Taylor (25% of 2009 net sales)
1.1.2 LOFT (49% of 2009 net sales)
1.2 Business Financials
1.2.1 Fiscal Year 2009 Performance
1.2.2 Q1 FY 2010 (ended May 1st, 2010)
1.2.3 Q2 FY 2010 (ended July 31, 2010)
1.2.4 Q3 Fiscal 2010 (ended October 30th, 2010)
2 Key Trends and Forces
2.1 "Almost-luxury" Brands Hurt by 2008-2009 U.S. Recession
2.2 Increasing Production Costs Pressure ANN Margins
2.3 Reaching Market Saturation
3 Competition
4 References
The Ann Taylor brand sells women's fashion attire and accessories. From FY 2008 to FY 2009, the Ann Taylor business net sales decreased 33.8%.[1]
LOFT (49% of 2009 net sales)
The LOFT brand sells casual attire and accessories for 15-30 year old women. From FY 2008 to FY 2009, the LOFT business net sales decreased 13.7%.[1]
Business Financials
Fiscal Year 2009 Performance
Ann Taylor, a mid-luxury firm, continued to struggle in 2009 from the 2008 Financial Crisis. Like Abercrombie & Fitch and J Crew, ANN is a "near luxury" retailer, so many of its customers will look for more affordable alternatives during harsh economic conditions. As such, ANN had a net income loss of $333 million in FY 2009.[2]
Q1 FY 2010 (ended May 1st, 2010)
For the quarter, ANN posted net sales of $476.2 million -- an 11.6% increase from Q1 FY 2010.[3]
ANN had comparable store sales growth of 14.1% from Q1 FY 2009, driven by a 50.7% increase in e-commerce sales.[3]
The strong sales performance let to net income of $22.616 million, compared to a net loss of $2.314 million in Q1 FY 2009.[3]
Due to its prosperity, ANN increased its SG&A expenses from $238.6 million to $243.8 million.[3]
Q2 FY 2010 (ended July 31, 2010)
ANN reported net sales of $483.5 million, a 2.8% increase compared to Q2 fiscal 2009.[4]
Comparable store sales increased 6.1%, compared to a decrease of 22.4% in Q2 fiscal 2009.[4]
The Ann Taylor business posted net sales of $207.2 million, an 8% increase compared to Q2 fiscal 2009.[4] The LOFT business posted net sales of $276.2 million, a 1% decrease compared to Q2 fiscal 2009.[4]
ANN reported net income of $19.1 million ($0.32 per diluted share, compared with net income of $3.6 million in Q2 fiscal 2009.[4]
Q3 Fiscal 2010 (ended October 30th, 2010)
ANN posted net sales of $505 million for the quarter, a 9.3% increase compared to Q3 fiscal 2009.[5]
Comparable store sales increased 12% from Q3 fiscal 2009.[5] Per segment, the Ann Taylor brand comparable store sales increased 22% and LOFT brand increasing 5%.[5]
Due to better cost management, ANN net income for the quarter increased ten-fold, from $2.1 million in Q3 fiscal 2009 to $24.2 million.[5]
Financials FY2006 FY2007 FY2008 FY2009
Gross Sales ($Mil) $2,343 $2,396 $2,194 $1,828
Net Income ($Mil) $142.98 $97.23 $(18.208) $(338.906)
Comp Same Store Sales 0.1% 2.8% 3.3% (17.8%)
Sales Per Square Foot $461 $474 $457 $402
[2]
Key Trends and Forces
"Almost-luxury" Brands Hurt by 2008-2009 U.S. Recession
Consumer spending on near luxury goods such as ANN products is discretionary in nature. In times of economic recession consumer's quickly decrease expenditure on non-necessities like cashmere fleeces. In 2007, both the real estate and credit markets were severely affected by the subprime lending crises. Consumers faced with an inability to draw on equity in their home to fund purchases and a tougher overall credit market were in many instances "forced" to spend less on clothing. Additionally, other economic factors like the price of oil which approached the $100 mark near the end of 2007, can further decrease disposable income available for discretionary purchases. Under such conditions, consumers to who do purchase clothing tend to skew their purchases toward lower end retailers.
Increasing Production Costs Pressure ANN Margins
Ann Taylor had a successful 2009 rebound from the 2008 U.S. Recession, as its shares increased 220% to pre-crisis levels.[6] ANN was able to have a good rebound because it lowered its EBITDA margin, which is used to measure the firm's profitability based on its capital expenditures and investment decisions. In mid-2010, however, ANN's margins have been pressured by rising production costs.
Ann Taylor is especially wary of its dependence on China, as 50% of the retailer's products are sourced from there.[6] With China's June announcement that it will consider de-pegging the Yuan, rising producer price inflation levels (which hit a high of 7.2% in May 2010)[6] will pressure ANN to pass on production costs to consumers through higher prices.