Ann Taylor Stores Corp. (ANN)
Q1 2009 Earnings Call Transcript
May 20, 2008 8:30 a.m. ET

Executives

Maria Sceppaguercio - Senior Vice President of Finance, Communications, and Investor Relations
Kay L. Krill – President, Chief Executive Officer & Director
Michael J. Nicholson – Executive Vice President, Chief Financial Officer & Treasurer

Analysts

Lorraine Hutchinson – Bank of America/Merrill Lynch
Tracy Kogan - Credit Suisse
Neely Tamminga - Piper Jaffray & Co.
Jennifer Black - Jennifer Black & Associates
Stacy Pak – SP Research
Betty Chen - Wedbush Morgan
Kimberly Greenberger - Citigroup
Laura Champine - Cowen & Company
Adrienne Tennant - Friedman, Billings, Ramsey
Michelle Tan – Goldman Sachs
Janet Kloppenburg - JJK Research
Liz Dunn - Thomas Weisel Partners
Robin Murchison - SunTrust Robinson Humphrey
Dana Telsey - Telsey Advisory Group

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to Ann Taylor Stores Corporation’s first quarter 2009 earnings conference call. At the request of the company, today’s conference call is being recorded. If you have any objections, you may disconnect at this time. Following prepared remarks by the company you will have the opportunity to ask questions. I would now like to turn the call over to Maria Sceppaguercio, Senior Vice President of Finance, Communications, and Investor Relations. Ma’am, you may begin.

Maria Sceppaguercio

Thank you and good morning everyone. Here with me today to discuss our results is Ann Taylor President and CEO, Kay Krill, and our CFO, Mike Nicholson.

As you know earlier this morning, we issued our results for first quarter of fiscal 2009. Last quarter we discussed with you our belief that the first half of 2009 would be all about maximizing gross margin dollars and reducing expenses as the macro and consumer environments were expected to remain weak.

So far our outlook for the economy is playing out as expected and we are pleased that by executing on this view we achieved a significant improvement in our bottom line performance versus the fourth quarter of last year.

In addition, our restructuring program and focus on reducing expenses have been successful in driving down our cost of doing business. For the quarter, excluding pre-tax restructuring expenses, which were less then $200,000 in the current quarter compared with $3.7 million in the first quarter of last year, we generated a loss per diluted share of $0.04 versus earnings per diluted share of $0.47 last year.

Now before I turn the call over to Kay, I would like to remind you that our discussion this morning includes forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements reflect the company''s current expectations concerning future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially. A detailed discussion of these factors and uncertainties is contained in the company''s filings with the SEC.

With that, I will hand it over to Kay.

Kay L. Krill

Good morning everyone and thank you for joining us. This past quarter as we discussed on our last call, was focused on controlling inventories and expenses to minimize risk. On that front I am pleased with the progress we made. We achieved a 55.5% gross margin rate in the quarter which exceeded year ago and was dramatically higher than the fourth quarter last year.

In addition, we reduced SG&A by $31 million or 11% despite a 1% increase in square footage for the quarter. Our strategy to conservatively plan inventory levels is clearly working in this environment and the results of our restructuring and cost reduction programs continue to exceed our expectations.

At the same time, our top line was under significant pressure in the quarter especially at the Ann Taylor division. As you know, this business is being repositioned so the spring season does not yet reflect Ann’s evolution.