EXHIBIT 99.1
ANNTAYLOR
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NEWS RELEASE
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ANNTAYLOR ANNOUNCES RECORD FISCAL YEAR 2003 SECOND QUARTER EARNINGS
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NEW YORK, NEW YORK, August 13, 2003 - AnnTaylor Stores Corporation
(NYSE: ANN) announced today net income for the second quarter ended
August 2, 2003 of $21,177,000, or $0.45 per share on a diluted basis (on
an average of 48.3 million shares outstanding), compared to net income
of $18,202,000, or $0.39 per share on a diluted basis (on an average of
48.5 million shares outstanding), in the second quarter of fiscal
2002.
As previously reported, total net sales for the second quarter of
fiscal 2003 were $390,207,000, up 13.7 percent from $343,143,000 in the
second quarter of fiscal 2002. By division, net sales were $216,038,000
for Ann Taylor and $140,008,000 for Ann Taylor Loft. Comparable store
sales for the second quarter of fiscal 2003 increased 5.3 percent,
compared to a comparable store sales decrease of 0.2 percent for the
second quarter of fiscal 2002. Comparable store sales by division for
the quarter were up 4.9 percent for Ann Taylor, compared to a 0.3
percent increase last year, and up 5.7 percent for Ann Taylor Loft,
compared to a 1.5 percent decrease last year.
Ann Taylor Chairman J. Patrick Spainhour said, "Despite our slow
start in the first quarter we managed to achieve record second quarter
earnings of $0.45 per share, which combined with our first quarter
earnings, equaled last year's record spring earnings performance. The
second quarter was propelled by positive comparable store sales each
month for both divisions other than a slight negative comparable
store sales percentage in June for Ann Taylor.
"Ann Taylor's positive comparable store sales for the quarter were
driven by strategically managed promotions that helped optimize selling
of product that continued to border on being too safe, lacking color and
sophistication. Ann Taylor Loft's success continued to be a full-price
story fueled by momentum coming out of March driven by fashion, color,
femininity and novelty product to provide our clients with unequaled
value."
Mr. Spainhour continued, "We remain comfortable with current
earnings per share guidance for the fall season in the range of $0.98 -
$1.04, and project third and fourth quarter earnings per share guidance
to be in the range of $0.57 - $0.61 and $0.41 - $0.43, respectively.
Full year earnings per share guidance is now in the range of $1.82 -
$1.88. Additionally, we expect August, September and October,
comparable store sales to be in the range of positive 3 to positive 5
percent for both divisions. For the fourth quarter we expected
comparable store sales to be in the range of positive 5 to positive 7
percent for both divisions."
Total inventory levels at the end of the second quarter, including
inventory attributable to Ann Taylor Global Sourcing, were down
approximately 8 percent on a per square foot basis compared to last
year, consistent across both divisions. This decrease is primarily due
to lower in-transit inventory levels compared to last year. The Company
expects inventory levels on a per square foot basis to be flat to last
year for the third and fourth quarter.
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Gross margin, as a percentage of net sales, decreased to 51.9
percent for the second quarter of fiscal 2003, compared to 52.8 percent
in the second quarter of fiscal 2002. This decrease is primarily due to
the combined effect of lower full price sales at Ann Taylor and lower
margin rates achieved on non-full price sales at both divisions.
Selling, general and administrative expenses during the second
quarter of fiscal 2003, were $166,660,000, or 42.7 percent of net sales,
compared to $150,425,000, or 43.8 percent of net sales for the same
period last year. The decrease in selling, general and administrative
expenses as a percentage of net sales are primarily due to increased
leverage on fixed expenses as a result of higher comparable store sales.
Operating profit was up slightly to 9.2 percent of net sales in
the second quarter of fiscal 2003, compared to 9.0 percent of net sales
in the second quarter of last year.
During the second quarter of fiscal 2003, the Company increased
its effective income tax rate from 39 percent to 40 percent to reflect
higher state taxes.
The Company opened two new Ann Taylor Loft stores, one Ann Taylor
Factory store and closed one existing Ann Taylor store and one Ann
Taylor Factory store during the second quarter of fiscal 2003. The
total store count at the end of the second quarter was 603, comprised of
350 Ann Taylor stores, 226 Ann Taylor Loft stores, and 27 Ann Taylor
Factory stores. During the fall season, the Company plans to open
approximately 8 Ann Taylor stores and 44 Ann Taylor Loft stores,
bringing the fiscal 2003 year total to approximately 73 store openings.
The Company's total capital expenditures for fiscal 2003 is now
projected at $80 million.
Total store square footage increased 8.1 percent to 3,408,000
square feet as of August 2, 2003, from 3,152,000 square feet at the end
of the second quarter of fiscal 2002. Total square footage, by
division, as of the end of the second quarter was 1,815,000 square feet
for Ann Taylor and 1,347,000 square feet for Ann Taylor Loft.
Total long-term debt at August 2, 2003 was $123,386,000. The
Company had no borrowings outstanding under its $175,000,000 credit
facility at the end of the second quarter of fiscal 2003.
For the full Spring season (fiscal year-to-date period ending
August 2, 2003), the Company's net income was $39,105,000, or $0.84 per
share on a diluted basis (on an average of 48.1 million shares
outstanding), compared to net income of $39,124,000 or $0.84 per share
on a diluted basis (on an average of 48.4 million shares outstanding),
for the same period last year.
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Spring 2003 net sales totaled $742,224,000, up 7.8 percent from
$688,535,000 in spring 2002. By division, net sales for the spring
season were $417,364,000 for Ann Taylor and $259,931,000 for Ann Taylor
Loft. Comparable store sales for the spring season decreased 0.5
percent. Comparable store sales by division were down 1.8 percent for
Ann Taylor and up 1.7 percent for Ann Taylor Loft.
Gross margin as a percent of net sales for the spring 2003 season
was 52.8 percent, compared to 53.4 percent in spring 2002. The decrease
in gross margin as a percentage of net sales are primarily due to lower
full price sales, combined with lower margin on non-full price sales at
Ann Taylor. Selling, general and administrative expenses as a
percentage of net sales for the spring 2003 season were flat compared to
the same period last year, at 43.8 percent of net sales.
Ann Taylor is one of the country's leading women's specialty
retailers, operating 603 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 client 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; the potential impact of health concerns relating to severe
acute respiratory syndrome, particularly on manufacturing operations of
the Company's vendors in Asia and elsewhere; 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
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ANNTAYLOR STORES CORPORATION
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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FOR THE QUARTERS AND SIX MONTHS ENDED AUGUST 2, 2003 AND AUGUST 3, 2002
(UNAUDITED)
QUARTERS ENDED SIX MONTHS ENDED
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AUGUST 2, AUGUST 3, AUGUST 2, AUGUST 3,
2003 2002 2003 2002
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(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net sales.............................................. $390,207 $343,143 $742,224 $688,535
Cost of sales ......................................... 187,646 161,965 350,648 320,794
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Gross margin .......................................... 202,561 181,l78 391,576 367,741
Selling, general and administrative
expenses ........................................... 166,660 150,425 325,278 301,506
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Operating income ...................................... 35,901 30,753 66,298 66,235
Interest income ....................................... 777 913 1,465 1,429
Interest expense ...................................... 1,674 1,826 3,368 3,525
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Income before income taxes ............................ 35,004 29,840 64,395 64,139
Income tax provision .................................. 13,827 11,638 25,290 25,015
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Net income ........................................ $ 21,177 $ 18,202 $ 39,105 $ 39,124
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Basic earnings per share of common stock .............. $ 0.48 $ 0.41 $ 0.89 $ 0.89
Weighted average shares outstanding ................... 44,024 44,311 44,034 44,145
Diluted earnings per share of common
stock ............................................. $ 0.45 $ 0.39 $ 0.84 $ 0.84
Weighted average shares outstanding,
assuming dilution .................................. 48,295 48,500 48,079 48,385
Number of stores open at beginning
of period .......................................... 602 551 584 538
Number of stores opened during period ................. 3 4 21 17
Number of stores expanded/relocated
during period * .................................... 3 --- 4 ---
Number of stores closed during period ................. 2 --- 2 ---
Number of stores open at end of period ................ 603 555 603 555
Total store square footage at end of period ........... 3,408,000 3,152,000
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* Expanded/relocated stores are excluded from comparable store sales for the
first year following expansion/relocation.
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ANNTAYLOR STORES CORPORATION
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CONDENSED CONSOLIDATED BALANCE SHEETS
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AUGUST 2, 2003 AND FEBRUARY 1, 2003
(UNAUDITED)
AUGUST 2, FEBRUARY 1,
2003 2003
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ASSETS (IN THOUSANDS)
Current assets:
Cash and cash equivalents ..................... $ 259,594 $ 212,821
Accounts receivable, net ...................... 14,830 10,367
Merchandise inventories ....................... 168,683 185,484
Prepaid expenses and other current assets...... 51,494 46,599
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Total current assets ...................... 494,601 455,271
Property and equipment, net ..................... 253,892 247,115
Goodwill, net ................................... 286,579 286,579
Deferred financing costs, net ................... 3,727 4,170
Other assets .................................... 15,492 17,691
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Total assets .............................. $1,054,291 $ 1,010,826
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .............................. $ 68,842 $ 57,058
Accrued expenses .............................. 88,217 94,137
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Total current liabilities ................. 157,059 151,195
Long-term debt, net ............................. 123,386 121,652
Deferred lease costs and other liabilities....... 27,066 23,561
Stockholders' equity:
Common stock, $.0068 par value;
120,000,000 shares authorized;
49,106,344 and 48,932,860 shares
issued, respectively .......................... 334 332
Additional paid-in capital .................... 503,683 500,061
Retained earnings ............................. 334,013 296,113
Deferred compensation on restricted stock...... (4,834) (3,968)
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833,196 792,538
Treasury stock, at cost
4,568,506 and 4,050,972
shares, respectively ................... (86,416) (78,120)
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Total stockholders' equity ................ 746,780 714,418
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Total liabilities and
stockholders' equity ................... $ 1,054,291 $ 1,010,826
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