Our results for the third quarter of fiscal 2010 reflected significant bottom-line improvement due to the combined impact of profitable sales growth, particularly at the Ann Taylor brand and in our e-commerce and factory/outlet channels, as well as cost savings across the Company resulting from the successful execution of our ongoing restructuring program and other cost savings initiatives. In addition, we continued to execute against our strategy to focus on enhancing top-line productivity while maximizing gross margin and carefully managing inventory levels, which resulted in net sales growth of 9.3% to $505.3 million and a strong gross margin rate of 57.2%.
Our Ann Taylor brand experienced a very strong quarter, with overall comparable sales up 21.9% for the period. All channels experienced comparable sales gains during the quarter, with a 23.4% increase at Ann Taylor stores, a 57.0% increase in the Ann Taylor e-commerce channel and an 11.3% increase at Ann Taylor Factory. Our clients responded well to the Ann Taylor assortment and the compelling fashion, quality and value it offered and, as a result, we were able to be very strategic and selective in our promotional activity. This generated strong full-price sales and strong gross margin rate performance across all three channels. From a product perspective, our wear-to-work offerings continued to resonate with our core client and bring new client interest to the brand. We experienced continued momentum in suiting, dresses, skirts and wear-to-work tops, and our jewelry offering continued its stand-out performance. The brand continued its multi-pronged marketing strategy, which successfully supported our objective to deliver profitable sales growth and gain market share across all channels of the business. Ann Taylor’s e-commerce channel experienced very strong top line and gross margin growth during the quarter, reflecting the success of our core merchandise offering, as well as expanded online assortments which featured a broader size range and exclusive colors and styles. Ann Taylor Factory also continued to perform well, with increases in conversion and AUR driving higher full-price sales and gross margin.
At the LOFT brand, overall comparable sales were up 4.5%, with a 0.6% decrease at LOFT stores, more than offset by a 64.6% increase in the e-commerce channel and a 22.0% increase at LOFT Outlet. Comparable sales in the stores channel improved month over month as the quarter progressed. LOFT’s gross margin rate for the quarter was strong in the online and outlet channels, but was under some pressure at LOFT stores, where we took action to clear through merchandise in the slower-moving knits and denim categories. Performance at LOFT stores during the early part of the quarter continued to be affected by merchandise mix issues that were identified during the second quarter, but steadily improved with new product deliveries as the quarter progressed. LOFT’s e-commerce channel delivered very strong results from both a sales and gross margin perspective and continued to generate stronger site traffic over last year. The LOFT Outlet channel also performed very well, with sales growth driven by increases both in AUR and UPT, resulting in a much higher gross margin rate over the third quarter of last year.
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SOURCE: gurufocus.com
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