EXHIBIT 99.1
ANNTAYLOR
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142 WEST 57TH STREET NEW YORK, NY 10019
ANN TAYLOR ANNOUNCES DECEMBER SALES RESULTS AND A $17 MILLION PRE-TAX CHARGE
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New York, New York, January 10, 2002 - AnnTaylor Stores Corporation (NYSE: ANN)
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today announced sales for the five weeks ended January 5, 2002, increased 7.7
percent to $167,094,000 from $155,224,000 for the five weeks ended December 30,
2000.
Comparable store sales decreased 2.4 percent for the fiscal month compared with
a comparable store sales decrease of 0.3 percent for the same five-week period
last year. By division, comparable store sales for fiscal December 2001 were
down 5.2 percent for the Ann Taylor division and up 5.3 percent for the new
concept Ann Taylor Loft division.
Due to the early Thanksgiving holiday this year versus last, the Company is
providing December and nine weeks ended January 5, 2002 comparable store sales
on a shifted calendar basis. Comparable store sales on a shifted calendar basis
for the month of December increased 6.6 percent, while comparable store sales on
a shifted calendar basis for the nine-week period increased 2.9 percent. By
division, shifted calendar comparable store sales for the month of December were
up 4.7 percent for the Ann Taylor division and up 12.3 percent for the new
concept Ann Taylor Loft division. By division, shifted calendar comparable store
sales for the nine week period ended January 5, 2002 were up 0.3 percent for the
Ann Taylor division and up 10.3 percent for the new concept Ann Taylor Loft
division.
Ann Taylor Chairman J. Patrick Spainhour said, "Although we are pleased with
December's better than expected comparable store sales results, the fourth
quarter environment continues to prove to be extremely promotional. However,
early sales results on January transitional product, which accounts for less
than 10 percent of the current month's in-store inventory, have been
satisfactory. Due to the ongoing aggressive promotional environment of the
quarter that is resulting in reduced margin opportunity, we still continue to be
comfortable with fourth quarter earnings guidance in the range of $0.25 - $0.30
per share on a diluted basis excluding the charge described below."
Inventory levels at the end of December were down approximately 10 percent on a
per square foot basis, compared to the prior year. This follows an approximate 9
percent decrease in inventory levels on a per square foot basis, at the end of
November 2001, compared to the prior year. Both comparisons exclude inventory
attributable to Ann Taylor Global Sourcing.
From a national perspective, the Company continues to be most negatively
impacted in downtown and tourist locations. For fiscal December, comparable
store sales in downtown and tourist locations decreased approximately 14
percent, following an 11 percent decrease in these same locations for November.
Geographically, the results in the West and South regions continue to lag in
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comparison to the rest of the country. This performance was consistent across
both the Ann Taylor and Ann Taylor Loft divisions.
The Company did not open or close any stores during December. The total store
count at month end was 342 Ann Taylor stores, 168 Ann Taylor Loft stores, 18 Ann
Taylor Loft Outlet stores and 13 Ann Taylor Factory stores. Total store square
footage at the end of the month increased 13.9 percent over the year before.
Year-to-date sales of $1,214,536,000 for the 48 weeks ended January 5, 2002
represent an increase of 5.6 percent over sales of $1,149,795,000 for the 48
weeks ended December 30, 2000. The Company's year-to-date comparable stores
sales decreased 7.3 percent over the same period last year. Comparable store
sales by division for the fiscal year-to-date period were down 10.2 percent for
Ann Taylor and up 3.4 percent for new concept Ann Taylor Loft.
AnnTaylor Stores Corporation also announced today a pre-tax charge to earnings
in the fourth quarter of 2001 of approximately $17 million or an earnings per
share impact of $0.33. This charge is comprised of approximately $7 million for
the writedown of certain assets associated with AnnTaylor.com, approximately
$3.3 million for the settlement of a class action lawsuit, as well as charges
related to the discontinuation of the Ann Taylor Cosmetics line, costs
associated with canceling certain Fall 2001 and Spring 2002 merchandise orders
and severance costs associated with reductions made in Ann Taylor's store and
home office workforce. Going forward, the projected annual pre-tax savings will
be approximately $3.5 million or $0.06 per share on a diluted basis.
The $7 million write-off associated with the Company's Online Store, was based
upon projected cash flows, which were not deemed adequate to support the value
of the assets associated with this ongoing business. The Online Store failed to
achieve the sales volume that it was expected to perform prior to its launch in
November of 2000.
The Company has reached an agreement in principle to settle the class action
lawsuit pending in the United States District Court for the Southern District of
New York against the Company, its wholly-owned subsidiary and certain former
officers and directors, alleging that the defendants made false and misleading
statements about the Company and its subsidiary from February 3, 1994 through
May 4, 1995. The net cost to the Company, after application of insurance
proceeds, will be approximately $3.3 million. The decision to settle this action
was not an admission of any wrong-doing, but reflected the significant legal
fees, other expenses and management time that would have to be devoted to
continue to vigorously defend it in the courts. Finalization of the settlement
is subject to Court approval.
In addition, Ann Taylor announced it has reached an agreement in principle to
sell its proprietary credit card portfolio. The sale is subject to entering into
a definitive agreement and receiving all necessary approvals and consents.
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Depending on the level of receivables as of the signing date, the Company
expects to receive cash of approximately $55 million upon the completion of the
sale. The Company anticipates that the sale of the proprietary credit card
portfolio will provide the means for strategic growth of the Ann Taylor credit
card.
The Company also announced today an amendment to its existing $175 million
credit facility primarily consisting of revisions to its financial covenants and
specifically excludes the pre-tax charge from covenant calculations.
Ann Taylor is one of the country's leading women's specialty retailers,
operating 541 stores in 42 states, the District of Columbia and Puerto Rico, and
also an Online Store at www.anntaylor.com.
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FORWARD-LOOKING STATEMENTS
Certain statements in this press release are forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements may use the words "expect",
"anticipate", "plan", "intend", "project", "believe" and similar expressions.
These forward-looking statements reflect the Company's current expectations
concerning future events and actual results may differ materially from current
expectations or historical results. Any such forward-looking statements are
subject to various risks and uncertainties, including failure by the Company to
predict accurately customer fashion preferences; decline in the demand for
merchandise offered by the Company; competitive influences; changes in levels of
store traffic or consumer spending habits; effectiveness of the Company's brand
awareness and marketing programs; lack of sufficient customer acceptance of the
Ann Taylor Loft concept in the upper-moderate-priced women's apparel market;
general economic conditions or a downturn in the retail industry; the inability
of the Company to locate new store sites or negotiate favorable lease terms for
additional stores or for the expansion of existing stores; lack of sufficient
consumer interest in the Company's Online Store; a significant change in the
regulatory environment applicable to the Company's business; an increase in the
rate of import duties or export quotas with respect to the Company's
merchandise; financial or political instability in any of the countries in which
the Company's goods are manufactured; acts of war or terrorism in the United
States or worldwide; and other factors set fourth in the Company's Form 10-K and
all filings with the SEC made by the Company after the filing of the Form 10-K.
The Company does not assume any obligation to update or revise any
forward-looking statements at any time for any reason.
Contact: Investor Relations:
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Barry Erdos
Chief Operating Officer
(212) 541-3318
Doreeen D. Riely
Director, Investor Relations
(212) 541-3484
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