Holy pencil skirt! It looks like Ann Taylor might actually be too small for its “Julie”-cut trousers.
The specialty fashion chain, known for classically tailored, upper-moderately priced women’s apparel, has been outgrown by its lower-priced spin-off, Ann Taylor Loft. In fact, Loft is almost twice the size of Ann Taylor these days, according to Seeking Alpha. That’s 502 Loft stores for 266 Ann Taylor stores, based on the retailer’s annual report. Ann operates an additional 128 outlet stores, under both names.
What happens when the spin-off business outgrows its parent? Well, for the parent, there’s risk of brand confusion and brand dilution. But it is all a matter of execution.
Accessibility does not equal quality. The bigger question is: Will the parent company pursue the lower-priced Loft and outlet stores at a cost to Ann Taylor’s resources and support? To most of us shoppers, these are just brick-and-mortar buildings filled with cocktail dresses and three-quarter-sleeve blazers, but these shops are run by teams of people vying for budget and real estate.
And it surely could not have been easy to ask for funding during the recession, when almost everyone was trading down, if shopping at all. The company in 2010 ended a three-year pruning, during which it closed 225 stores. In the same year it converted four of its Ann Taylor stores to a smaller format and transformed an additional six Ann Taylor stores into Lofts.
In 2011, the chain plans to open 20 Ann Taylor stores, all in the smaller format. In total, it plans to open 78 stores. The other 58 break down as: 38 Loft Outlets, six Ann Taylor Factory stores, and 14 Loft stores.
The good news is that despite its smaller size, Ann Taylor did deliver strong same-store sales results in 2010 – up 19.3 percent, compared with 5 percent at Loft. Let’s hope the adjustments over the past few years will help the Ann Taylor brand survive with grace.
As the company put it in its annual report: “Our merchandise assortments in 2010 leveraged the success and learnings from our 2009 evolution of the brand and, as a result, were chic, relevant and compelling.”
