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Mar 17, 2010
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Merrill upgrades Ann Taylor on turnaround hopes

By
Reuters
Published
Mar 17, 2010

March 17 (Reuters) - AnnTaylor Stores Corp's (ANN.N) efforts to revamp its offerings and reduce prices will boost the company's performance near term, Bofa Merrill Lynch said, and raised the stock of the women's apparel retailer a notch to "neutral".

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Ann Taylor - www.anntaylor.com

The retailer, which runs its namesake Ann Taylor chain and the more-casual, less-expensive LOFT stores, will cut opening price points for each product category by about 15 percent, while ensuring this does not hurt margins, analyst Lorraine Hutchinson said in a note to clients.

"This will improve the brand's value proposition and help sustain comps, which have already turned positive due to better product and easier comparisons," the analyst said.

Like its peer Chico's FAS Inc (CHS.N) which also caters to mature women, AnnTaylor suffered in the recession as some customers reduced spending on themselves before cutting back on purchases for their families.

Both chains have been revamping their merchandise since then, with Ann Taylor trying to reposition its flagship brand as more fashionable and modern.

Analyst Hutchinson said near-term earnings forecasts were "beatable", but added that longer term growth rate at the company remains somewhat unclear with the core concepts approaching saturation.

Shares of the company went up a percent to $20.64 Wednesday 17 March before the bell. They had closed at $20.42 Tuesday 16 March on the New York Stock Exchange.

(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Bijoy Koyitty)

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