By Aditi Shrivastava and Shailaja Sharma
March 14 (Reuters) - Women’s apparel retailer Ann Inc’s quarterly profit topped analysts’ estimates again as shoppers snapped up the trendy merchandise sold at its Loft chain, sending its shares up more than 7 percent.
The parent of the Ann Taylor and Loft brands also said it would cut 100 jobs, or about 5 percent of its full-time workforce.
Ann Inc has handily beaten quarterly profit estimates in the last two years, making it one of the few retailers that have weathered a protracted weakness in U.S. consumer spending.
The company, however, warned that current-quarter sales could miss estimates.
“We are approaching the first-quarter outlook with caution given the extreme weather conditions, the heightened promotional environment and soft traffic,” Chief Executive Kay Krill said on a post-earnings conference call with analysts.
But analysts played down the warning, saying they remained optimistic about the company’s prospects.
“What is encouraging from the call is that spring fashion continues to resonate in some of the warmer climate regions, which gives them some potential for pent up demand when temperature in East becomes favorable,” Mizuho Securities analyst Betty Chen said.
Last year, both Ann Taylor and Loft were forced to offer more promotions as insipid clothing lines failed to excite shoppers. The company has since turned things around with revamped offerings.
Earlier this week, apparel retailers ranging from Express Inc to Urban Outfitters Inc warned that results in the current quarter would be hurt by choppy sales trends at malls and severe winter weather.
Ann Inc said total company comparable sales rose 2.9 percent in the fourth quarter. Comparable sales at the company’s Loft stores, which sells trendier merchandise, rose 5.7 percent.
Comparable sales at the Ann Taylor brand fell 1.1 percent, primarily due to weakness at its factory outlets. The brand caters to a slightly older clientele and is known for its traditional pearls-and-classics fashions.
However, analysts said Ann Taylor continued to gain share in the wear-to-work segment.
Oppenheimer & Co analyst Anna Andreeva said some of this market share gains was coming from departmental stores like J. C. Penney.
Ann’s fourth-quarter net income rose to $4.7 million, or 10 cents per share, in the fourth quarter ended Feb. 1, from $2.4 million, or 5 cents per share, a year earlier.
Analysts on average had expected a profit of 7 cents per share, according to Thomson Reuters I/B/E/S.
Gross margins rose to 49.3 percent from 49.1 percent a year earlier.
Total net sales rose 2.6 percent to $623.3 million, slightly below the average analyst estimate of $623.8 million.
The company said it expects first-quarter total net sales to approach $600.0 million. Analysts on average expect sales of $613.3 million.
As of January 2012, Ann had about 19,900 employees, of which about 2,000 were full-time salaried employees.
Ann said the realignment is expected to result in ongoing annualized pre-tax operating savings of about $25 million, of which about $15 million is expected to be realized in 2014.
The company’s shares were up 6.5 percent at $37.21 in midday trading.