Ann Inc. (NYSE:ANN), the holding company of Ann Taylor and Loft Stores, reported better-than-expected fiscal second-quarter earnings on Friday, an eighth successive quarter where profits rose, thanks to rising sales of its reasonably priced yet trendy colored clothes.
Following the earnings announcement, shares rallied, gaining more than 20%â€“hitting highest price in last five years.
For the quarter, companyâ€™s sales also bettered Streetâ€™s expectations.
Profit stood at $30.7 million, or 63 cents a share, up from $24.8 million or 47 cents a share, in the year earlier quarter. Revenue rose by 7% to $594.9 million.
Analyst polled by Thomson Reuters had forecasted earnings of 51 cents a share on revenue of $585.6 million.
Meanwhile, the company has also lifted its full-year earnings and sales outlook. ANN now expects full-year sales at $2.39 billion, from last fiscalâ€™s $2.38 billion. Economistsâ€™ consensus estimate is at $2.37 billion.
For the fiscal third quarter, the company is expecting sales of $600 million while economists are projecting at $605.7 million.
The company reveled that it was in process of opening more stores for both of its brands in Canada by the fall of 2012.
Lately, the company has lowered its spending on promotions for both brands even as it focused on selling products at affordable prices, a key reason behind strong sales.
Earlier, the Ann Taylor brand specialized in office wears, but it was gradually transformed into more colorful designs.Â In order to strengthen its brand image, the company also roped in actress Kate Hudson as the brand ambassador.
According to Piper Jaffray analyst, Neely Tamminga, much better fall and holiday collection together with improved inventory management will help ANN to boost its earnings.
In a note, Tamminga lifted the rating of Ann shares to â€śOverweightâ€ť from â€śUnderweightâ€ť, having a price target of $ 37.