Ann Taylor expands cost-cutting plan & improve profitability
AnnTaylor Stores Corporation said that it is expanding its previously announced restructuring initiatives and taking further actions to reduce the Company's cost structure and improve profitability. These actions build upon the Company's multi-year strategic restructuring program that was first announced in January 2008. The Company also provided an update on its expectations for the second quarter period ending August 1, 2009.
Based on the expanded program, the Company now expects to generate ongoing annualized savings totaling approximately $125 million over the three-year program period ending in fiscal 2010, compared to the $85-$95 million in savings previously anticipated. Approximately $40 million of these savings were generated in fiscal 2008, an incremental $60 million are expected to be realized in the current fiscal year, and the remainder are expected in fiscal 2010.
Kay Krill, Ann Taylor President and Chief Executive Officer stated, "Since we began our strategic restructuring program in January 2008, our goal has been to build a more effective and efficient operational foundation that supports future growth and improved profitability over the long term. In light of the current environment, and encouraged by the process improvements and efficiencies we have achieved to-date, we have now identified additional opportunities to further reduce our SG&A cost structure, while improving our efficiency and profitability. These additional steps are expected to generate approximately $30 million in incremental annualized savings over our previous range. At the same time, we continue to be focused on delivering compelling product and exceptional value to our clients."
The actions announced today include, among other things, further right-sizing of the Company's corporate and divisional organization, changes to our field staffing, expansion of the Company's strategic non-merchandise procurement initiative, and further optimization of the Company's real estate portfolio.
Total pre-tax restructuring costs associated with the Company's multi-year program are now expected to be in the range of $130-$140 million, approximately $92 million of which have already been incurred. These costs include the $95-100 million previously anticipated under the program, plus incremental one-time costs of approximately $35-$40 million.
Of these incremental costs, the majority of which are expected to be incurred in the second quarter of 2009, approximately $20-25 million are expected to be non-cash costs related to the optimization of our real estate portfolio and approximately $15 million are expected to be cash costs associated primarily with the further streamlining of the organization.
Update on Second Quarter Expectations
With respect to the second quarter ended August 1, 2009, the Company indicated that it expects to report sales of approximately $470 million. Comparable store sales for the secondquarter 2009 will continue to reflect weakness, primarily at the Ann Taylor division.