Q3FY15 net income drops 20% at women's retailer Ann
In the third fiscal quarter ending November 1, 2014, net income at women’s apparel retailer and NYSE listed, Ann Inc, dropped just a shade under 20 per cent, from the same quarter of 2013.
Net income at Ann slipped to $33.1 million or $0.72 per diluted share in the third quarter of 2014 or down 19.66 per cent from $41.2 million or $0.89 per diluted share in the third quarter of 2013.
On a GAAP basis, Ann said net income for the reporting quarter was $29.9 million, or $0.65 per diluted share, which includes $3.2 million or $0.07 per diluted share after-tax charge associated with the closure of Ann Taylor's Madison Avenue store.
Net sales for the third quarter of 2014 totalled $646.8 million as against $657.5 million in the corresponding quarter of 2013.
By brand, net sales across all channels of the Ann Taylor brand amounted to $233.0 million compared with net sales of $249.2 million in the year ago quarter.
At the LOFT brand, net sales across all channels, including Lou & Grey, were $413.8 million as against net sales of $408.4 million in the prior year third quarter.
Comparable sales for the quarter declined 4.3 per cent compared to an increase of 3.7 per cent in the third quarter of 2013.
Gross margin, as a percentage of net sales was down 310 basis points from the year earlier third quarter to 52.6 per cent.
“Gross margin performance in the third quarter of 2014 includes the impact of around $5 million, or 80 basis points, in incremental air freight costs as a result of labour uncertainty at the West Coast ports, as well as the impact of continued traffic challenges, a highly competitive promotional environment and soft product performance in select categories at Ann Taylor,” the retailer said.
The women’s retailer reported third quarter of 2014 SG&A expenses of $293.2 million, which includes impact of around $5 million related to closure of Ann Taylor's Madison Avenue store.
Excluding this charge, Ann said, SG&A expenses would have been $288.2 million, down from $295.8 million, it reported in same quarter of 2013.
As a percentage of net sales, SG&A expenses were 45.3 per cent or 44.6 per cent excluding the impact of the aforementioned charge, down from 45.0 per cent, the retailer reported last year.
According to Ann, this improvement was due to lower marketing and performance-based compensation expense, as well as ongoing savings associated with its first quarter of 2014 restructuring.
Excluding the aforementioned charge, operating income in the quarter under review fell to $51.7 million or $46.7 million on a GAAP basis as against $70.4 million in the third quarter of 2013.
The Company ended the quarter with approximately $110 million in cash and cash equivalents.
Total inventory per square foot at the end of the third quarter rose around 8 per cent year-on year, from 22, 3 and 8 per cent hikes at Ann Taylor, LOFT and factory/outlet channel, respectively. (AR)
Fibre2fashion News Desk - India