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Ann Taylor (ANN). Now there's a stock that drives me crazy. If you check out previous articles I've written on the retailer (here's one from November 2009; here's another from August 2009), you'll notice that I didn't have a great handle on where the stock was heading. It's tough sometimes to figure out how the market will judge the fundamentals of a situation, even if the fundamentals seem especially clear.
Anyway, the company reported fourth-quarter numbers earlier today. On an adjusted basis, profit came to 5 cents per share. A year ago, investors had to deal with a loss of $1.03 per share. Analysts thought a loss of a penny per share was in the cards. That's got to be worth a bid, right?
Wrong. At the time of this writing, Ann Taylor was trading down 1.6%. This is especially surprising, given that the stock isn't too far from a 52-week high, and that it's done very well over the last twelve months. You would figure buyers would be lining up to take a position.
Such is Wall Street. I actually don't blame investors for being cautious. Same-store sales decreased 0.6% overall. At the Ann Taylor concept itself, comps plunged over 7%. Gross margin, however, saw a nice expansion.
What should traders do? To my way of thinking, I'd say taking profits might be a good strategy at this juncture. I don't consider Ann Taylor a solid long-term idea. If you want that in the retail space, as I've said many times previously, you go with a Target Corporation (TGT) or a Wal-Mart Stores, Inc. (WMT), one of the bluer chips in the sector. You forget an Ann Taylor (at least for the time being; down the line, who knows). You can check out the technical potential of the shares at a later date.
Disclosure: I don't own any company mentioned; positions can change without notice.
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