Following weak results last quarter, my colleague Alyce Lomax posited the question: Is Ann Taylor (NYSE:ANN) a turnaround or a turn-away? As long as its LOFT division continues to underperform, I'm not sure we gain any clarity.
Put simply, Ann Taylor continues to struggle with its LOFT concept. LOFT's comparable same-store sales declined 9% from year-ago levels. During the call, CEO Katherine Krill blamed the concept's merchandise. LOFT was too fashion oriented and did not carry enough "wear now" items on hand. Further, the brand was too bland in its color orientation.
What's unfortunate about LOFT's current struggles is that these are areas that management should have been on top of. We know that "wear now," or classic casual wear, has been one of the key success stories for many women's retailers in recent quarters. Christopher & Banks (NYSE:CBK) and Dress Barn (NASDAQ:DBRN) have both benefited from having the right mix and balance of casual wear on their store shelves, while last fall Chico's FAS (NYSE:CHS) was hammered for not having enough casual wear. Even Ann Taylor's management has commented on the success of this important category over the past several months. How Ann Taylor dropped the ball on this one, then, is beyond me.
Additionally, I find it baffling that another one of LOFT's miscues was a lack of color in its apparel. It was spring! Flowers are blooming, birds are chirping, bees are buzzing -- the colors are supposed to come out!
LOFT did see nice results from its dress category, as one would expect. Polo Ralph Lauren (NYSE:RL), Guess? (NYSE:GES), and G-III Apparel (NASDAQ:GIII), representing Calvin Klein, have all declared this to be the year of the dress.
Management does expect LOFT's merchandise offering to "improve gradually" through the course of the summer. Admittedly, I find little comfort in these words -- the sales results have sagged so low, the least that it could do is "improve gradually."
We've only addressed Ann Taylor's LOFT concept, but even Ann Taylor stores were far from impressive, with comps growth of 0.9% in the quarter. Ann Taylor may indeed end up being a successful turnaround, but how long will investors have to wait, and will it be worth it? In this Fool's opinion, until substantial improvements are made, Foolish investors should look elsewhere.
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Fool contributor Jeremy MacNealy has no financial interest in any company mentioned. The Motley Fool has a disclosure policy.
