Live from NRF: The Tale of Ann Taylor’s Turnaround

New York—It’s good to be Ann Taylor these days. The New York-based women’s apparel merchant has built its nine-year-old Ann Taylor Loft brand into a billion-dollar business while revamping its core merchandise line and remodeling its stores. In fact, the company is on track for a record year in fiscal 2006. But just a few years ago the brand was in trouble. At the National Retail Federation’s “Big Show” on Wednesday, Ann Taylor president/CEO Kay Krill shared what went wrong and how the ship was righted.

One problem was a lack of differentiation between the core Ann Taylor brand and the Loft brand. The company had started Loft in 1999 as a more affordable version of Ann Taylor that focused on careerwear, Krill said. By 2002 the company was beginning to better understand its Loft clients and their needs, and it began tailoring the brand to apparel that is more relaxed and casual than that of the core brand.

While the Loft brand evolved to a look of casual elegance, Ann Taylor’s core line by 2004 had become too young and trendy. “The styles did not resonate with customers,” Krill said, and the company’s sales per square foot fell to a five-year low. The company had to get its product line back to its classic heritage and leverage its wardrobing capabilities and professional suiting strengths, she noted.

In August 2005 Ann Taylor launched its Celebrations line of more formal attire for occasions such as weddings. “We had been quietly servings brides and bridesmaids for decades” before creating the line, Krill said.

This past year the company focused on remodeling its stores, which had become outdated: “Stores were uninviting and did not showcase the product well,” Krill said. The stores were redesigned to look more aspirational and more modern. Customers evidently agreed, as the core brand’s net sales increased from $628 million in 2005 to $669 million last year; sales per square foot went from $459 in 2004 to $480 in 2006.

Krill describes the company’s growth strategy as “developing a pipeline of opportunities to drive continued top- and bottom-line growth.” Retailers must clearly differentiate brands in a crowded marketplace and strive to create a customized, relevant experience that exceeds customer expectations. What’s more, merchants must, evolve, elevate, and innovate to be successful, she said: “Clients are not standing still—neither should we.”

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