casual fashion. Analysts had long worried that LOFT stores would cannibalize sales “as traditional Ann Taylor shoppers sought more relaxed, lower-priced merchandise, particularly during the recession.” Ann Taylor would be 59 years old in 2013 and needed to make sure it wouldn’t become a victim of a midlife crisis.3 Kay Krill, ANN’s CEO, had been reflecting on these issues for some time. Krill had been appointed president of Ann Taylor Stores Corporation (ANN) in late 2004, and she succeeded to president/CEO in late 2005 when J. Patrick Spainhour retired after eight years as CEO. Even back then, there was concern among commentators and customers that the Ann Taylor look ...view middle of the document...
ANN also carried both brands in factory outlet stores. The merchandise in each branded division’s store was specifically designed to carry the brand label. The stores featured the previous years’ top fashions and were located in outlet malls, where customers expected to find Ann Taylor and other major-label bargains. Both brands were also increasingly retailed online, on their respective websites.
CASE 9 :: ANN TAYLOR C47
Survival in Specialty Retail *
ANN Inc., specialty retailer of women’s apparel sold under its Ann Taylor or LOFT brands, was one of the few darlings of the retail sector stock analysts at the end of 2012. Fourth quarter revenues for ANN were up almost 9 percent from the previous year, making it one of only a handful of retailers to show real growth. Going into 2013, specialty retailers were beginning to recover from four years of dismal performance. The economic troubles of 2008 had lasted through 2009, producing one of the worst retail seasons in recent memory. 2010 had been an uphill battle, but at least some retailers had seen improvement, especially the luxury vendors such as Neiman Marcus and Nordstrom. The feeling during 2011 was that customers had shown “a clear preference for select high-end apparel brands such as Gucci,” and were “willing to pay a premium on something that delivers on luxury.” At the same time, shoppers were also “hunting down designer brands at steep discounts” at stores such as T.J. Maxx or Target, causing one businessman to label this the “barbell effect”: “highend brands are holding ground among consumers, while spending at value-oriented stores has also been pretty stable. [But] it’s a tough place for mid-tier right now,” namely, those retailers such as Gap, Chico’s, and Ann Taylor.1 By 2012, luxury fashion spending may have been up, but the mid-market specialty apparel retailers continued to struggle. Customers were looking for value, but also fashion—if a store had the right product, with the right price point, it could be a winner. Quality could beat quantity, but the quest for this “right” balance had many retailers resorting to discounting month after month in order to drive sales or recover from bad guesses and poor inventory management.2 The firm with the right “mix” could stand out, and analysts were pointing to ANN’s strong results. Ann Taylor was starting to look good. However, Ann Taylor had had its own set of problems, mainly with its two divisions: the legacy Ann Taylor store for upscale professional women versus the LOFT’s more
*This case was prepared by Associate Professor Pauline Assenza, Western Connecticut State University, Professor Alan B. Eisner of Pace University, and Professor Jerome C. Kuperman of Minnesota State University–Moorhead. This case is solely based on library research and was developed for class discussion of strategies rather than to illustrate either effective or ineffective handling of the situation. An earlier version of this case was...