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Ann Taylor: dressing down?
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October 7, 1997: 8:10 p.m. ET
Sales results cast doubt on new president's strategy, analysts say
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NEW YORK (CNNfn) - Shortly after Patricia DeRosa came on board at Ann Taylor Stores Corp. last December, Wall Street applauded the roll-out of her new strategy.
But now some analysts and investors question her plans.
With a solid track record developing the Old Navy concept at Gap Inc. and a short stint at Charming Shoppes Inc., DeRosa -- or "Patty," as she is known -- was hired as president and chief operating officer and placed in charge of merchandising.
"They wanted to simplify their product lines ... more concentration in certain selections," said Alice Ruth, analyst at Montgomery Securities.
By May, Ann Taylor's stock (ANN) soared as much as 63 percent in value. But, shares of the specialty retailer have wilted since the hazy days of summer. On Tuesday, the stock eased 1/16 to 14-1/2 -- sitting right near its 52-week low.
"The beginning of her strategy, which has just been implemented, is getting a mixed response," Ruth said.
Wall Street analysts attributed the steep decline to increasing doubt that DeRosa's strategy will materialize on the bottom-line and translate to higher earnings.
In September, Ann Taylor reported a 22-percent drop in comparable-store sales for August -- the first month DeRosa's new merchandise was to hit the stores.
"That's pretty dismal," said Richard Jaffe, analyst at Schroder & Co. "My sense is September is not going to be much better."
"There's concern that earnings estimates will have to be reduced," said Dana Telsey, analyst at Bear Stearns.
Analysts currently expect Ann Taylor to earn 14 cents a share but estimates are as low as a loss of 1 cent.
And communication is part of the problem, explained Jaffe, who added DeRosa has yet to articulate her strategy at any public forum such as analysts' meetings or luncheons.
Officials from Ann Taylor declined to comment.
-- Robert Liu
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