During last week's earnings conference call, Krill spoke at length about her plans for the company, but did not address the question of whether Ann Taylor would be a takeover target eventually (by the Gap, for example). "Our challenge at Loft is to maintain the momentum," Krill noted. "With new competition on the horizon, we cannot take success for granted. We're expanding our marketing, including increased circulation of our mailers and e-mail messages. We will also test and fine-tune a new format, our store of the future, this summer in five locations, and will roll it out in 2006."

The company will open 70 to 75 new Loft stores in 2005, with generally larger footprints—about 6,200 sf—to accommodate recently introduced new lines of sleepwear and an expanded petites assortment. "We also see both Loft and our on-line business as testing grounds for new concepts, including concepts centered on color, size and category," she noted. "Our client is looking for an affordable thrill that she can wear the next day."

Regarding the core Ann Taylor stores, Krill spoke in terms of turnaround. "The key to serving our client's need is understanding who she is—what she's looking for from us," she said. "We've mapped out her demographic profile, her personality traits, and her style preferences, and now we're aggressively communicating our findings within our organization. We're using this information to guide every element of our strategy, including product design, marketing, store layout and merchandise presentation."

Behind the scenes, she also said that some of the processes successful at Loft are being instituted at core Ann Taylor stores, such as a retail pricing scheme that "sets retail prices appropriately, based on competitive and historic benchmarking."