Earnings Preview: AnnTaylor Stores Corp.

| About: Ann, Inc. (ANN)

AnnTaylor Stores (NYSE:ANN) is expected to report Q2 earnings before market open Friday, Aug. 22, with a conference call scheduled for 8:30 am ET.


Analysts are looking for a profit of 48c on revenue of $622.17M. The consensus range is 40c to 51c for EPS, and revenue of $598.66M to $646.98M, according to First Call. On August 12, the company reaffirmed its Q2 EPS forecast of 42c to 47c, excluding items, and FY08 EPS $1.80 to $1.90 vs. First Call consensus of $1.83.

Analyst Views

Piper Jaffray believes AnnTaylor's better-than-expected earnings could be "short lived" given the current prospects for Fall merchandise. Specifically, the firm has concerns with floorsets at LOFT and the core Ann Taylor stores; the firm believes it is unlikely LOFT will be able to continue driving earnings alone considering the underperformance from the core stores.

While Citigroup, which downgraded shares to Sell from Buy, continues to view the company's long-term restructuring story favorably, the firm says a miss was probably not factored into shares and investors should look for a more attractive entry point to the stock.

AnnTaylor was also downgraded to Market Perform from Outperform at Friedman Billings, which cited the increasingly difficult macro environment that it believes will weigh on the company's top-line recovery. The firm does believe the company is running the business better, it is still expected to struggle given the deteriorating economic conditions. Specifically, the firm says the Missy customer is "very reluctant" to spend, and the environment promotional and challenging than previously anticipated earlier in the quarter.