ANN Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Ann Taylor parent ANN (NYSE: ANN  ) is one of them. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. 

The women's retail niche has been a challenging place for investors lately, as companies have had a tough time navigating the changing fashion trends to maintain consistent success. ANN bounced sharply higher during the summer, but since then, investors have gotten nervous again. Let's take an early look at what's been happening with ANN over the past quarter and what we're likely to see in its quarterly report on Friday.

Stats on ANN

Analyst EPS Estimate

$0.01

Change From Year-Ago EPS

(90%)

Revenue Estimate

$617.8 million

Change From Year-Ago Revenue

9%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will ANN disappoint its investors this quarter?
Analysts have lost confidence over the past month in their projections on ANN's earnings, slashing what had been an optimistic $0.25 per share call for the just-ended quarter to just $0.01 and similarly reducing fiscal 2014 estimates. Shareholders have had similar qualms, as the stock has dropped 9% since early December.

We've already gotten a sense of just how bad ANN's fourth quarter will be, as the company announced preliminary results early last month. With poor anticipated revenue figures resulting from weak holiday sales and the fallout from Hurricane Sandy during November, ANN shares dropped 7% after the news was announced. The company's Loft stores were particularly weak, having to boost promotions to dump inventory. Even modest growth from the Ann Taylor segment wasn't enough to offset overall weakness.

Admittedly, ANN isn't the only women's retail chain to run into challenges. Coldwater Creek (NASDAQOTH: CWTRQ  ) widened its loss estimates for the holiday quarter back in January, citing a similar need for promotional sales that hit the company's long-struggling margins. Even the relatively strong Chico's FAS (NYSE: CHS  ) , which has undergone a highly successful restructuring over the past couple of years, has given up some its share-price gains, as it announced slowing same-store sales gains during the holiday quarter.

In its quarterly report, watch for ANN to discuss its strategy to get same-store sales back up, as well as how it can use its online presence to boost revenue. Given how quickly trends get established in this industry, it's essential for ANN to nip any emerging downward trend in the bud now before it gets worse.

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