Ann Taylor expands strategic restructuring program
08 Nov '08
4 min read
The organizational streamlining involves the strategic right-sizing of the corporate and divisional organizations and is expected to result in ongoing annualized savings, which will benefit both gross margin and selling, general and administrative expenses, of approximately $25 million. The one-time pre-tax charge of approximately $12 million will be incurred in the third quarter of fiscal 2008.
Updated Third Quarter Guidance
With respect to the third quarter ended November 1, 2008, the Company indicated that it expects to report net sales of approximately $527 million, compared to $601 million in the year-ago quarter. Comparable store sales for the third quarter 2008 declined approximately 19% versus the third quarter of 2007, with trends weakening dramatically as the quarter progressed.
For the Ann Taylor division, comparable store sales for the third quarter of 2008 declined 25%, and in-store inventory per square foot, excluding Beauty, is expected to be down 20% versus year-ago for the quarter. For the LOFT division, comparable store sales declined 15%, and in-store inventory per square foot is expected to be down 15%. As a result of weaker-than-expected sales and margin for the third quarter, the Company now expects to report earnings per diluted share, excluding restructuring and non-cash impairment costs, of approximately breakeven.
Looking ahead, the Company expects the current weakness in consumer spending to persist through the fourth quarter of 2008 and into 2009. The Company will provide an update of its outlook for the fourth quarter and full year of fiscal 2008 on its third quarter earnings conference call, scheduled for November 21, 2008.
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