There has been no shortage of investors who are looking at certain retailers as possible turnaround plays. If you want a retail turnaround story that's a better feel-good story than most, look no further than Ann Taylor
Last week, Ann Taylor said that its same-store sales for May were twice what analysts expected, having increased 12% (granted, the figure is up against an easy comparison -- last May, Ann Taylor's same-store sales decreased 7.1%). Same-store sales at its lower-priced Ann Taylor Loft concept increased 14%, while comps at core Ann Taylor increased 10.4%. Total sales rose a respectable 22.8%.
As for the turnaround stories galore in retail these days, some of the retailers in question do, to some degree at least, compete with Ann Taylor, which is by no means a teenybopper retailer. For quite some time, investors pinned high hopes on Talbots
Meanwhile, Gap
Instead of making wacky acquisitions, embarking on high-priced marketing campaigns with questionable logic, or pouring money into new concepts to jump-start growth, Ann Taylor's management put its nose to the grindstone and worked hard on fixing the merchandise. (Indeed, last quarter Ann Taylor said in its conference call that it's beginning to see the fruits of its labor in terms of merchandising, better inventory management, and work it has done on differentiating its brand.) Of course, investors have already put a lot of faith in Ann Taylor -- its stock has risen 55% since last autumn, and it currently trades at a P/E of 27.
Fool contributor Ryan Fuhrmann assessed Ann Taylor's most recent quarter and brought up the idea that the stock has become pricey even though the company hasn't yet fully proven it can sustain its recovered sales momentum. I definitely agree with that assessment, but given some of the other pricey bets investors made in retail turnarounds over recent history, I'd say that at least Ann Taylor proved itself to be a more conservative turnaround bet than most.
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Alyce Lomax does not own shares of any of the companies mentioned.