AnnTaylor Stores Corporation announced additional actions designed to further reduce the Company's cost structure and enhance its operational efficiency. These actions, which include an organizational streamlining announced, build upon the Company's multi-year strategic restructuring program first announced in January 2008. The Company also reduced its guidance for the third quarter of fiscal 2008.
Kay Krill, Ann Taylor President and Chief Executive Officer stated, "Following a solid first half performance, during which we effectively navigated a difficult economy, the dramatic deterioration in both the financial markets and the macroeconomic environment in September and October has put additional pressure on the retail industry, in general, and the women's apparel sector, in particular. As a result, third quarter financial results are tracking well below our previous expectations."
Ms. Krill continued, "We are moving more aggressively to accelerate our cost savings initiatives and to ensure our organization is appropriately structured for a recessionary environment. Savings from our January restructuring program are now expected to exceed previous estimates and, combined with the actions announced today, we expect to further improve our cost structure and position the company well for when the economy improves."
"We are also continuing to very carefully manage our expenses and inventories, and we are preserving our cash. During the third quarter, we did not purchase shares under our existing share repurchase authorization and, in this regard, we plan to continue a conservative approach. In addition, we will be significantly scaling back capital spending in 2009."
"With the benefit of a strong, debt-free balance sheet and approximately $295 million in available liquidity, including more than $80 million in cash, we are well positioned to support our brands and focus on strengthening our underlying business, even as we take aggressive steps to reduce our cost structure."
Under the expanded strategic restructuring program, which includes the organizational streamlining announced today, the Company expects to generate total ongoing annualized savings of $80-$90 million over the three-year program period, compared to the $50 million previously anticipated. Approximately $35 million of these savings are expected to be realized in fiscal 2008.
Total pre-tax restructuring costs over the three-year period are now expected to be in the range of $65-$70 million. These costs include the $40-45 million originally anticipated under the January program, plus incremental costs of approximately $12 million associated with the actions announced today, as well as charges totaling approximately $12 million related to additional non-cash write-down of assets associated with the Company's store closure plan announced in January. Approximately $30 million of the one-time costs associated with the program are expected to be incurred in fiscal 2008.
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