Women’s apparel retailer Ann Inc. (NYSE:ANN) is scheduled to announce its Q1 fiscal 2012 earnings on May 18.  Analysts and investors will keenly watch Ann’s earnings on Friday, as the results will provide insights into the current scenario of women’s luxury apparel market. Additionally, we will also look for an update on Ann Taylor stores channel, which has witnessed weak sales for the previous two quarters.
Expectations from this quarter
Going by the trends this quarter, we expect Ann to see an improvement in both sales and margins. The company should benefit from the warm February and March months, which benefited most apparel retailers. It will be interesting to see the competition between Ann and Gap’s Banana Republic in women’s aspirational luxury market. Banana Republic has been a resurgent brand this quarter, witnessing nearly 12% and 5% comparable sales growth in February and March, respectively. Whether Banana Republic’s growth has come at the expense of Ann’s market share, or is this an industry-wide trend, are some of the questions that we seek answers in the upcoming earnings.
We expect Ann’s margins to improve mainly on a quarterly basis. The gradually improving U.S. macro-economic conditions have resulted in a lighter promotional scale in the apparel market this quarter, and we expect Ann’s margins to benefit from the same.
Watching for updates on Ann Taylor stores channel
The Ann Taylor stores channel has been the primary weakness for the company over the past quarters. Despite solid growth in earnings, Ann’s shares tumbled after the results last quarter due to a 11% decline in Ann Taylor’s Q4 2011 comparable store sales.
The company has taken measures to alleviate these concerns with the appointment of Brian E. Lynch as Brand President, AnnTaylor division. The move did resonate well with the investors, but what impact the new leadership will have on sales is yet to be seen.Notes: