ANN net sales increased
By brand, net sales across all channels of the Ann Taylor brand totaled $219.9 million in the first quarter of 2014, compared with net sales of $219.3 million in the first quarter of 2013. At the LOFT brand, net sales across all channels were $370.6 million in the first quarter of 2014, compared with net sales of $355.2 million in the first quarter of 2013.
Total Company comparable sales for the quarter decreased 1.8% versus a decrease of 0.5% in the first quarter of 2013. At Ann Taylor, total brand comparable sales declined 2.3%, reflecting flat comparable sales at Ann Taylor, which includes Ann Taylor stores and anntaylor.com, and a decline of 7.1% in the Ann Taylor Factory channel. At LOFT, total brand comparable sales declined 1.6%, reflecting decreases of 1.8% at LOFT, which includes LOFT stores and LOFT.com, and a decline of 0.2% in the LOFT Outlet channel.
Gross margin, as a percentage of net sales was 53.4%, versus the 55.8% gross margin rate achieved in the first quarter of 2013. This performance primarily reflected stronger merchandise margin at Ann Taylor that was more than offset by higher-than-anticipated promotional levels at LOFT and in company's factory outlet channels as compared with the first quarter of 2013.
Selling, general and administrative expenses for the first quarter of 2014 were $288.7 million, versus $286.7 million reported in the first quarter of 2013. As a percentage of net sales, selling, general and administrative expenses were 48.9%, a 100 basis point improvement compared to the first quarter of 2013, reflecting a decrease in performance-based compensation expense as well as the benefit of ongoing disciplined expense management. These decreases were partially offset by an increase in payroll, occupancy and other variable expenses related to store growth.
The Company recorded a pre-tax restructuring charge of $17.3 million during the first quarter of 2014 in connection with its previously announced strategic realignment. There was no such restructuring charge recorded in the first quarter of 2013.
During the first quarter of 2014, the Company reported operating income of $9.2 million on a GAAP basis. Excluding the aforementioned restructuring charge, operating income in the first quarter of 2014 was $26.5 million, compared with operating income of $33.9 million in the first quarter of 2013.
Net income for the first quarter of 2014 was $5.2 million, or $0.11 per diluted share, on a GAAP basis, which reflects the impact of the $10.2 million, or $0.22 per diluted share, after-tax restructuring charge. Excluding the effect of the restructuring charge, the Company reported net income of $15.4 million, or $0.33 per diluted share, in the first quarter 2014 compared with net income of $20.9 million, or $0.44 per diluted share, in the first quarter of 2013.
The Company ended the quarter with approximately $128 million in cash and cash equivalents.
Total inventory per square foot at the end of the first quarter increased 3% versus year-ago, reflecting increases of 15% at Ann Taylor and 8% in company's factory outlet channel, partially offset by a decrease of 6% at LOFT. The results at Ann Taylor and in company's factory outlet channel reflect a change in merchandise mix. The decrease at LOFT was primarily due to the successful clearance of early Spring product, as well as an overall decrease in unit inventory per square foot.
During the first quarter of fiscal 2014, the Company opened 13 new stores, comprised of three Ann Taylor Factory stores, seven LOFT stores and three LOFT Outlet stores, and closed four Ann Taylor stores and two LOFT stores. The total store count at the end of the fiscal first quarter of 2014 was 1,032, comprised of 264 Ann Taylor stores, 111 Ann Taylor Factory stores, 544 LOFT stores and 113 LOFT Outlet stores. ■