Ann Taylor (NYSE:ANN) still faces its share of challenges, and investors may want to find more promising retailers to put their hard-earned money into these days.

Second-quarter net income at Ann Taylor fell 27% to $31.7 million, or $0.50 per share. Sales were fairly anemic, up only about 1% to $614 million, while same-store sales dropped 6.2% versus a 10.3% increase last year at this time. The company had a list of reasons as to why the same-store sales fell in the second quarter, including sluggish traffic and product-specific problems, and its Loft concept was a particular issue, with comps dropping 11% there.

Things may have been looking up for Ann Taylor last year, but a lot of that was arguably because it faced easy comparisons, since it struggled prior to that. It appears Ann Taylor's problems remain, even though the second-quarter results did exceed analysts' expectations.

The company has made much of the new retail concept it plans, which is aimed at "the modern" boomer and due for launch in fall 2008. Ann Taylor says it believes that space is "significantly underserved," but it seems a little weird to me, given that its core Ann Taylor concept seems to aim for fairly mature career women to begin with. Meanwhile, there are already plenty of boomer-oriented retailers out there, such as Chico's (NYSE:CHS), Coldwater Creek (NASDAQ:CWTR), and Talbots (NYSE:TLB). And of course, Gap (NYSE:GPS) had to hightail it out of the older female demographic when it decided to shutter its Forth & Towne concept earlier this year. Granted, Gap's got its share of problems with its own three main concepts, and surely those were part of the reason for its hasty retreat. But you've got to wonder whether it also figured a good run was better than a bad stand, because that demographic is a tough nut to crack. 

And of course, I can't resist asking: Why does it make sense for a retailer to launch a brand-new concept when it appears to be having a hard time making its current ones resonate with consumers? There's a good reason to think perhaps the company should simply focus on the ones it already has. In a purely anecdotal turn, years ago I used to have a hard time walking out of Ann Taylor Loft empty-handed, since it had such reasonably priced and irresistible clothes. Let's just say it's been many a season since I had the same sense of excitement about that concept's merchandise. 

Earlier today, I wrote about bebe's (NASDAQ:BEBE) most recent earnings, and while that's another retailer that has fallen on tough times here lately, at least it has a very important positive element displayed as cash on its balance sheet. Ann Taylor appears to be shakier in that department, considering it is in a downward trajectory. It currently has $114.4 million in cash and securities, but I looked back at the second quarter of last year and found its cash has decreased a whopping 75% from $457.9 million last year. That's some pretty serious deterioration.

Given the macroeconomic concerns at the moment, and the fact that retail stocks have taken a real drubbing, there are most certainly bargains out there to be had for investors who like to shop for stocks at their local malls. However, right now investors might as well research the quality names and stay the heck away from retailers that need to turn around, since possible weakness in consumer spending will make it all the harder for strugglers to regain their foothold. To my way of thinking, Ann Taylor qualifies as one of those stocks investors should leave on the rack for now.  

Gap and bebe are Motley Fool Stock Advisor recommendations. Gap has also been recommended by Motley Fool Inside Value.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.