Ann Taylor Turnaround?

NEW YORK-The market voted with its wallet late last week on the announcement of Ann Taylor Stores Corp.’s choice of Kay Krill, current president of the company, to ascend to the CEO position later this year to succeed the outgoing J. Patrick Spainhour. On Thursday morning, share prices for the women’s clothier spiked upward to $27.80, though they settled down to $26.43 by day’s end, with about 4.8 million shares trading hands, nearly five times as many as the day before. That despite the fact that Ann Taylor also chose that day to announce that the company had had a disappointing Q4.

“You bet on winners,” Robin S. Murchison, an analyst with Jeffries & Co. Inc., tells GSR. “She has the decision-making skills to get the Ann Taylor division going again.” Jeffries rates the company a buy, and a number of other firms upgraded the stock late last week, including Wachovia, CSFB and Wedbush Morgan.

Krill, who has been with Ann Taylor for 11 years, was named president of the stores division late last year. She’s generally acknowledged as the creative force behind the company’s spin-off retailer, Ann Taylor Loft, which has done better than the original Ann Taylor stores lately. For example, in the company’s fiscal Q4 2004 (ended Jan. 29), comp-store sales were down 10.1% for Ann Taylor compared to the same period last year, but up 3.2% for Ann Taylor Loft compared to Q4 2003. In the key holiday sales month of December, the Loft’s comp-store sales increased an impressive 6.3%, but Ann Taylor comps were down 7.4%, compared to the previous December.