This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Ann Taylor Stores Corp. (ANN: chart) on March 14, 2008.

President & CEO: Kay Krill
CFO: Michael Nicholson
Sr. VP, Communications and IR: Maria Sceppaguericio

Key Investors Issues

- The net loss was 11 cents per share versus net income of 31 cents per share in prior year.
- Quarterly revenue, excluding the extra week in prior year, rose 3.7% to $601 million.
- During the quarter, the firm repurchased around 900,000 shares at a total cost of $26 million.
- For Q1, the company projects EPS in the range of 35 cents to 40 cents.

Fourth Quarter Fiscal 2007 Financial Highlights

The company reported a net loss on a GAAP basis of $6.7 million, or 11 cents per share, including the impact of the restructuring charge.

Excluding the restructuring charge, net income in the quarter was $11.5 million, or 19 cents per share, compared with net income of $21.5 million, or 31 cents per share, in the fourth quarter of 2006.

Net sales for the fourth quarter were $601 million, an increase of 3.7% versus the prior year, when excluding the $31 million associated with the extra week in 2006.

By division, excluding the impact of the extra week in 2006, net sales for the quarter at Ann Taylor declined 7% and at LOFT net sales advanced 8%. Same store sales for the quarter decreased 3.2%, with Ann Taylor down 7.8% and LOFT down 0.5%.

Gross margin, as a percentage of net sales, increased 110 basis points to 48.7% from 47.6% in the fourth quarter of last year.

This increase was entirely driven by strength at LOFT due to positive client response to the division’s product offering versus last year, partially offset by weakness at Ann Taylor.

SG&A, as a percentage of net sales, increased 300 basis points to 45.6% compared to 42.6% of net sales in the prior year.

This largely reflects the impact of the extra week in fiscal 2006 which benefited the SG&A rate in the year ago period as well as the impact of deleveraging due to the lower same store sales in the fourth quarter.

A significant factor in the results for the quarter and the year was the restructuring program that was launched at the end of 2007.

This impacted operating profit by $30 million and net earnings by $18 million or 30 cents per diluted share. Excluding the restructuring charge, operating income in the quarter was $18.2 million compared with the $30.5 million in operating income in last year.

- The weighted average diluted shares outstanding for the quarter were 60.1 million shares versus 70.4 million shares in the fourth quarter last year, largely reflecting the benefit of the firm’s share repurchase program.
- The effective tax rate for the quarter was 38.3% versus 37.9% in Q4 of last year.
- During the quarter, the firm repurchased approximately 900,000 shares at a total cost of $26 million.

Fiscal 2007 Financial Highlights

The diluted earnings per share, on a GAAP basis, were $1.53, including 31 cents in one-time restructuring costs.

Excluding one-time restructuring costs, diluted earnings per share for the full year were $1.84, compared with $1.98 in fiscal 2006.

The net sales for the 52 weeks of fiscal 2007 were $2.4 billion, which were up 3.7% versus 2006 when adjusted for the extra week last year.