EXHIBIT 99.1
ANNTAYLOR
NEWS RELEASE
142 WEST 57TH STREET NEW YORK,
N.Y. 10019
FOR IMMEDIATE RELEASE
- ---------------------
ANN TAYLOR ANNOUNCES 2002 FOURTH QUARTER AND FULL YEAR EARNINGS
---------------------------------------------------------------
NEW YORK, NEW YORK, March 11, 2003 - AnnTaylor Stores Corporation (NYSE:
ANN) announced today net income for the fourth quarter ended February 1, 2003
of $16,123,000, or $0.35 per share on a diluted basis (on an average of 48.3
million shares outstanding), compared to a net loss of $332,000, or $0.01 per
share on a diluted basis (on an average of 43.8 million shares outstanding),
in the fourth quarter of fiscal 2001. Fiscal 2001 fourth quarter net income
and earnings per share included $17,000,000 in pre-tax nonrecurring charges
and $2,760,000 in goodwill amortization. Fiscal 2001 fourth quarter earnings
per share and shares outstanding have been restated for the effect of the
3-for-2 stock split that occurred in May 2002.
As previously reported, total net sales for the fourth quarter of fiscal
2002 totaled $352,213,000, down 5.2 percent from $371,386,000 in the fourth
quarter of fiscal 2001. Comparable store sales for the fourth quarter of
fiscal 2002 decreased 12.3 percent, compared to a comparable store sales
increase of 2.1 percent for the fourth quarter of fiscal 2001. Comparable
store sales by division for the quarter were down 14.6 percent for Ann
Taylor, compared to flat last year, and down 7.1 percent for Ann Taylor Loft,
compared to an 8.1 percent increase last year.
Gross margin, as a percentage of net sales, increased to a record 52.0
percent in the fourth quarter of fiscal 2002, compared to 45.3 percent in the
fourth quarter of fiscal 2001. Fourth quarter fiscal 2001 gross margin was
affected by $4,100,000 in nonrecurring charges. Before considering these
nonrecurring charges, gross margin, as a percentage of sales, was 46.4
percent. In addition, fourth quarter fiscal 2002 gross margin benefited from
higher full price sales, higher margin rates achieved on both full price and
non-full price sales at both divisions, as well as the results of a favorable
year-end physical inventory.
Selling, general and administrative expenses during the fourth quarter
of fiscal 2002, were $156,067,000, or 44.3 percent of net sales, compared to
$162,821,000, or 43.8 percent of net sales for the same period last year.
Fourth quarter fiscal 2001 selling, general and administrative expenses were
impacted by $12,900,000 in pre-tax nonrecurring charges. Before considering
these nonrecurring charges, selling, general and administrative expenses for
the fourth quarter of fiscal 2001, as a percentage of sales, were
$149,894,000, or 40.4 percent. The remaining increase in selling, general
and administrative expenses for the fourth quarter of fiscal 2002 as compared
to the same period last year was primarily due to higher tenancy and store
operation expenses, an increase in the provision for management performance
bonus and severance costs associated with a former executive's employment
contract with the Company. These increases were offset, in part, by savings
associated with a change in the Company's vacation vesting policy, which
became effective on January 1, 2003.
================================================================================
2
ANNTAYLOR 2
Operating profit was 7.7 percent of net sales in the fourth quarter of
fiscal 2002, compared to 0.7 percent of sales in the fourth quarter of last
year.
During the fourth fiscal quarter, the Company opened 1 new Ann Taylor
store and 5 new Ann Taylor Loft stores, and closed 1 Ann Taylor store and 1
Ann Taylor Factory store. The total store count at the end of the fourth
quarter was 584, comprised of 350 Ann Taylor stores, 207 Ann Taylor Loft
stores, and 27 Ann Taylor Factory stores.
Total store square footage increased 8.1 percent to 3,305,000 square
feet as of February 1, 2003, from 3,057,000 square feet at the end of the
fourth quarter of fiscal 2001. Capital expenditures for fiscal 2002 were $45
million, which included the addition of 10 new Ann Taylor stores and 39 new
Ann Taylor Loft stores.
Total long-term debt at February 1, 2003 was $121,652,000. The Company
had no borrowings outstanding under its $175,000,000 credit facility at the
end of the fourth quarter of fiscal 2002.
For the fiscal year-to-date period ended February 1, 2003, the Company's
net income was $80,158,000, or $1.72 per share on a diluted basis (on an
average of 48.3 million shares outstanding), compared to net income of
$29,105,000, or $0.67 per share on a diluted basis (on an average of 43.7
million shares outstanding) for the same period last year. Excluding the
amortization of goodwill, fiscal 2001 year-to-date net income and earnings
per share on a diluted basis would have been $39,750,000 and $0.90,
respectively. Fiscal 2001 year-to-date earnings per share and shares
outstanding have been restated for the effect of the 3-for-2 stock split that
occurred in May 2002.
Fiscal year-to-date net sales totaled $1,380,966,000, up 6.3 percent
from $1,299,573,000 as of February 2, 2002. Comparable store sales for the
fiscal year-to-date period decreased 3.9 percent, compared to a decrease of
6.1 percent for the same period last year. By division, fiscal 2002
comparable store sales decreased 5.3 percent for Ann Taylor and 1.0 percent
for Ann Taylor Loft. Gross margin as a percent of net sales for the fiscal
year-to-date period ended February 1, 2003 was 54.1 percent, compared to 49.8
percent for the same period last year. The increase in gross margin as a
percentage of net sales is the result of higher full price sales and higher
margin rates achieved on both full price and non-full price sales at both
divisions. Selling, general and administrative expenses as a percentage of
net sales were 44.3 percent, compared to 44.4 percent for the same period in
fiscal 2001. In addition to the impact to fiscal 2001 selling, general and
administrative costs of the fourth quarter nonrecurring charge discussed
above, lower internet costs and reduced marketing spending were offset by an
increase in the provision for management performance bonus and higher tenancy
expenses.
Ann Taylor Chairman J. Patrick Spainhour said, "Despite the challenging
retail environment in 2002, Ann Taylor succeeded in delivering the best
earnings performance in our 48-year history. Our continued progress in
aligning our product assortments to our core brand competencies and enhancing
our client's overall shopping experience enabled us to sell more merchandise
at full price. We also maintained a tight rein on inventories and
implemented efficiency initiatives in our global sourcing function, which
contributed to a 430 basis point improvement in gross margin. Improved gross
margin and a continued focus on expense control resulted in operating margin
of 9.8 percent, a 520 basis point increase over last year."
================================================================================
3
ANNTAYLOR 3
"The start of fiscal 2003 was negatively effected by severe weather
conditions and prevailing economic uncertainty. Due to the effect that these
external factors have had on our business we are lowering first quarter
earnings guidance from the range of $0.45 - $0.47, to the range of $0.39 -
$0.41. We currently expect to achieve first quarter comparable store sales
in the low to mid single digit negative range compared to last year. We feel
good about our product offering, however, due to the unknown factors stemming
from the external environment, we believe that it is premature to provide
updated second quarter, fall season and full year guidance."
Mr. Spainhour continued, "Anticipating that any economic recovery will
be slow and measured, we remain committed to further strengthening our
business fundamentals in 2003 through continued disciplined expense and
inventory management."
The Company also announced today the election of Michael Trapp to the
Board of Directors. Mr. Trapp was a partner at Ernst & Young from 1973 until
his retirement in 2000, where he held various executive positions including
Managing Partner for the Southeast area. Mr. Trapp has also joined the audit
committee of the Board of Directors as the audit committee financial expert.
Ann Taylor is one of the country's leading women's specialty retailers,
operating 588 stores in 42 states, the District of Columbia and Puerto Rico,
and also an Online Store at www.anntaylor.com.
------------------
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; 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; work stoppages, slowdowns
or strikes; and other factors set forth in the Company's filings with the
SEC. The Company does not assume any obligation to update or revise any
forward-looking statements at any time for any reason.
# # #
Contact:
Barry Erdos
Chief Operating Officer
(212) 541-3318
Doreen Riely
Director of Investor Relations
(212) 541-3484
- - Tables Follow - - -
================================================================================
4
ANNTAYLOR 4
ANNTAYLOR STORES CORPORATION
----------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
FOR THE QUARTERS AND FISCAL YEARS ENDED FEBRUARY 1, 2003 AND FEBRUARY 2, 2002
(UNAUDITED, FOR THE QUARTERS ENDED FEBRUARY 1, 2003 AND FEBRUARY 2, 2002)
QUARTERS ENDED FISCAL YEARS ENDED
---------------------- --------------------
Feb. 1, Feb. 2, Feb. 1, Feb. 2,
2003 2002 2003 2002
------- ------- ------- -------
(dollars in thousands except per share amounts)
Net sales ..................... $ 352,213 $ 371,386 $ 1,380,966 $ 1,299,573
Cost of sales ................. 168,919 203,151 633,473 651,808
------- ------- ------- -------
Gross margin .................. 183,294 168,235 747,493 647,765
Selling, general and
administrative expenses .... 156,067 162,821 612,479 576,584
Amortization of goodwill ...... -- 2,760 -- 11,040
------- ------- ------- -------
Operating income .............. 27,227 2,654 135,014 60,141
Interest income ............... 927 290 3,279 1,390
Interest expense .............. 1,723 1,854 6,886 6,869
------- ------- ------- -------
Income before income taxes .... 26,431 1,090 131,407 54,662
Income tax provision .......... 10,308 1,422 51,249 25,557
------- ------- ------- -------
Net income (loss) ............. $ 16,123 $ (332) $ 80,158 $ 29,105
======= ======= ======= =======
Basic earnings (loss) per share
of common stock ............ $ 0.36 $ (0.01) $ 1.81 $ 0.67
======= ======= ======= =======
Weighted average number of
shares outstanding (000) ... 44,374 43,409 44,248 43,325
======= ======= ======= =======
Diluted earnings (loss) per
share of common stock ...... $ 0.35 $ (0.01) $ 1.72 $ 0.67
======= ======= ======= =======
Weighted average number of
shares outstanding,
assuming dilution (000) .... 48,265 43,796 48,301 43,661
======= ======= ======= =======
Number of stores open at
beginning of period ....... 580 532 538 478
Number of stores opened
during period ............. 6 9 49 67
Number of stores expanded
during period* ............ --- --- --- 6
Number of stores closed
during period ............. 2 3 3 7
------- ------- ------- -------
Number of stores open
at end of period .......... 584 538 584 538
Total store square footage
at end of period .......... 3,305,000 3,057,000
- ----------------------
* Expanded stores are excluded from comparable store sales for the first year
following expansion.
================================================================================
5
ANNTAYLOR 5
ANNTAYLOR STORES CORPORATION
----------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
FEBRUARY 1, 2003 AND FEBRUARY 2, 2002
FEBRUARY 1, FEBRUARY 2,
2003 2002
----------- -----------
ASSETS (in thousands)
Current assets
Cash and cash equivalents ................ $ 212,821 $ 30,037
Accounts receivable, net ................. 10,367 65,598
Merchandise inventories .................. 185,484 180,117
Prepaid expenses and other current assets 46,599 50,314
----------- -----------
Total current assets ................. 455,271 326,066
Property and equipment, net ................ 247,115 250,735
Goodwill, net .............................. 286,579 286,579
Deferred financing costs, net .............. 4,170 5,044
Other assets ............................... 17,691 14,742
----------- -----------
Total assets ......................... $ 1,010,826 $ 883,166
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable .................... $ 57,058 $ 52,011
Accrued expenses ......................... 94,137 82,007
Current portion of long-term debt ........ --- 1,250
----------- -----------
Total current liabilities ............ 151,195 135,268
Long-term debt, net ........................ 121,652 118,280
Deferred lease costs and other liabilities . 23,561 17,489
Stockholders' equity
Common stock, $.0068 par value;
120,000,000 shares authorized;
48,932,860 and 48,275,957
shares issued, respectively ............ 332 328
Additional paid-in capital ............... 500,061 484,582
Retained earnings ........................ 296,113 218,600
Deferred compensation on restricted stock (3,968) (9,296)
----------- -----------
792,538 694,214
Treasury stock, at cost
4,050,972 and 4,210,232
shares, respectively .............. (78,120) (82,085)
----------- -----------
Total stockholders' equity ........... 714,418 612,129
----------- -----------
Total liabilities and
stockholders' equity .............. $ 1,010,826 $ 883,166
=========== ===========