AnnTaylor Stores Corporation

views updated May 23 2018

AnnTaylor Stores Corporation

142 West 57th Street
New York, New York 10019
U.S.A.
Telephone: (212) 541-3300
Fax: (212) 541-3379
Web site: http://www.anntaylor.com

Public Company
Incorporated: 1988
Employees: 7,980
Sales: $1.08 billion (2000)
Stock Exchanges: New York
Ticker Symbol: ANN
NAIC: 44812 Women’s Clothing Stores

Through its wholly owned subsidiary, AnnTaylor Inc., Ann-Taylor Stores Corporation is a retailer of women’s apparel, with stores in major downtown city locations and shopping malls across the United States. Noted for its classic, tailored designs for career women, AnnTaylor strives to provide what it refers to as “a head to toe concept of dressing with an edited assortment of tasteful, fashion-updated classic apparel and accessories in a one-stop shopping environment.” Having faced several challenges in the early 1990s, in the form of falling sales and management shakeups, the company regained its poise in the latter half of the 1990s.

The 1950s–70s: From College Town Boutique to Manhattan

The original AnnTaylor store was founded in New Haven, Connecticut, in 1954, by Robert Liebskind. Interestingly, there was never an actual Ann Taylor; the name was simply selected to characterize the target customer. The company’s line of classic clothing became popular and eventually new shops were opened primarily in such eastern college towns as New Haven, Providence, Boston, Cambridge, and Georgetown. In 1977, Liebskind sold his stores to Garfinckel, Brooks Brothers, Miller & Rhodes Corporation (known as Garfinckels). Under new management, AnnTaylor stores began to spread rapidly during the late 1970s.

During this time, AnnTaylor began showcasing the work of Perry Ellis, who designed clothing for the AnnTaylor label; AnnTaylor also had exclusive contracts with Marimeko and other cutting-edge, upscale designers. The stores eventually began to offer European fashions, as management found that loyal AnnTaylor customers were generally willing to spend a little more for unique, less conservative styles but still less likely to pay the prices or risk the fashion statements available in designer boutiques. Moreover, by refraining from carrying a wide variety of designer labels and brands offered by department stores, AnnTaylor had less competition and thus more pricing flexibility; the company could also produce fast reactions to fashion trends and regional needs.

The value of AnnTaylor’s name as a brand increased steadily, and the stores became increasingly popular. The flagship store for the company, on 57th Street in Manhattan, featured a chic restaurant on the third floor. The AnnTaylor customer during this time was characterized as a new breed of well-dressed career women who favored classic fabrics in fashionable designs. Describing a 1978 AnnTaylor catalog, one writer for Working Woman magazine noted that the catalog showed “a duo of well-dressed working women ganging up on a would-be mugger, hitting him with their AnnTaylor purses. The message: The AnnTaylor woman might wear silk and cashmere, but watch out—she’s taken karate.”

The 1980s: A Series of New Owners and Management

In 1981, AnnTaylor, as part of Garfinckels, was acquired by Allied Stores Corporation and quickly became the most profitable among the group of Allied retailers, outperforming even Brooks Brothers and Bonwit Teller. Allied subsequently unloaded unprofitable subsidiaries and further polished its core stores’ image of upscale, high-profile specialty and department stores. In 1983, Sally Frame Kasaks, who had started in the fashion industry as a salesperson, was named president of the company, and she served in that capacity until 1985, when she left to join Talbots and, eventually, Abercrombie & Fitch.

A new president and CEO, Mark Shulman, faced new challenges. A Canadian financier, Robert Campeau, was attracted by Allied’s cache of healthy, upscale stores with recognizable names. In 1986, his Campeau Corporation made an overture to acquire Allied but was rebuffed. Campeau was tiny compared with Allied; it had 1985 revenues of $153 million, while Allied reported $4.1 billion for the same year. Nevertheless, in the leveraged buyout-crazed 1980s, it was not hard for Campeau to get financial backing. After securing $3 billion in credit, Campeau launched a hostile takeover of Allied. The final price for the deal was more than $5 billion by some estimates, and Campeau had to sell off many of Allied’s units to pay for the purchase, retaining only the best performers, like Brooks Brothers and AnnTaylor. By the end of 1987, more than $1 billion of Allied’s holdings had been sold off, and Campeau was able to pay down some of its debts.

Although it was ahead of schedule on debt payments, Campeau was still feeling the effects of the transaction, earning only $44 million in the first three quarters of 1987. Moreover, its interest payments for that same time period were $244 million. Thus some analysts were surprised when Campeau quickly set its sights on Federated Department Stores, Inc., a giant holding company of department stores then three times the size of Allied. With more than $4 billion in fresh loans, Campeau initiated a similar takeover, again increasing the initial per-share offer, until the final cost for Federated reached $6.6 billion. Campeau sold off Brooks Brothers to a British department store to get cash for its debts and for Federated stock. Although Campeau vowed he would not sell AnnTaylor, the retailer was put on the block by June 1988, when Campeau claimed that AnnTaylor’s spot in specialty retailing no longer complemented Campeau’s department store holdings. At the time, AnnTaylor had 100 stores nationwide and accounted for eight percent of Allied’s $3.96 billion in sales in 1988. Ann-Taylor was the last of Allied’s specialty stores. Proceeds from the sale would go toward Allied’s bank debt, as well as for Federated stock.

It was not hard to find a buyer for AnnTaylor. Joseph E. Brooks, formerly the chief executive officer of Lord & Taylor, led a group of investors that included Merrill Lynch Capital Partners, Inc. and some of AnnTaylor’s management. The price paid was $430 million, which, to some observers, seemed a tad high for a company that, like many companies in the women’s apparel industry, had recently reported flat earnings. In fact, although AnnTaylor had more than 36 percent annual growth in both earnings and sales between 1983 and 1987, its earnings seemed to have peaked in 1986. Expectations soared, however, now that Brooks was in charge.

Brooks was noted for making Lord & Taylor over into an upscale store offering classic merchandise. Under his leadership, Lord & Taylor had expanded from 19 to 46 units and sales had quadrupled. Brooks moved quickly at AnnTaylor, bringing in a new management team, some of whom had been with him at Lord & Taylor, including his son, Thomas H.K. Brooks, who was named AnnTaylor’s president. Faced with staggering interest payments and a tricky debt-to-equity load, the company focused on rapid expansion and cost-cutting tactics.

1990s: Hard Times in the Industry; Instability at Home

By 1991, AnnTaylor had spread as far from its East Coast roots as Jackson, Mississippi, and now boasted 58 new outlets and a total of 176 stores. With new stores helping to boost sales, Brooks felt confident enough to make bids for Saks Fifth Avenue and Bloomingdale’s. He was outbid for Saks, however, and the $1 billion he offered for Bloomingdale’s failed to tempt its owners, Federated Stores. With the debt load still pressuring AnnTaylor to perform, the company’s buyout bosses proposed a public offering of AnnTaylor stock. The industry was limping and a stock offering seemed a good way to raise equity enough to tide AnnTaylor over the rough spots. Despite the fact that AnnTaylor was not faring well in same-store sales, the indication of a retail store’s ability to increase stock, the offering went well. Seven million shares were sold at $26 per share, providing the cash flow necessary to continue planned expansions.

The offering also increased AnnTaylor’s burden to perform well in sales and earnings growth, however, and it was in the face of such pressures that some decisions were made that would eventually prove detrimental to the company. The new management decided that the typical AnnTaylor customer of 1990 was not as affluent as its earlier clientele had been, and, in an effort to broaden its appeal and cut expenses, the company began using fabrics of lesser quality for the first time.

Management also opted to end AnnTaylor’s long and profitable relationship with Joan & David shoes, a product that had accounted for roughly 14 percent of AnnTaylor’s sales for 30 years and had a fine reputation of its own, pulling many customers into AnnTaylor stores. AnnTaylor began offering its own line of shoes instead, at about half the price. Early reviews of these shoes bordered on snide, and earnings and revenues became weak. Stock collapsed and some stockholders sued, alleging misrepresentation of the facts by the prospectus that accompanied the public offering.

Company Perspectives:

Our purpose is to provide our clients with a fashion right wardrobing experience with quality products, service, and shopping environment that are relevant to her lifestyle needs; our associates with a work environment that is inspiring, compassionate and learning-orients, emphasizing high standards of excellence; our shareholders with a solid and growing investment; our world with a company culture committed to improving quality of life for women and celebrating their accomplishments.

Then, in December 1991, Joseph E. Brooks abruptly announced his retirement from his position as chairman. His son, Thomas Brooks, had quit the presidency just as suddenly a few weeks earlier, as had Gerald H. Blum, the company’s vice-chairman. With their company suddenly being run by a committee, stockholders and investors became anxious. The company had lost about two-thirds of its market value since going public in 1991 and was losing its most loyal customers daily. That year, AnnTaylor lost $15.8 million on sales of $438 million.

In February 1992, AnnTaylor wooed former president Sally Frame Kasaks back. Her first action, like Brooks’s, was to install a solid management team. Kasaks chose a primarily female management staff, composed of seasoned veterans of the specialty retail trade. Kasaks then worked to reestablish AnnTaylor’s reputation for high-quality clothing, getting rid of the cheap synthetic fabrics and overseeing a new autumn line of clothes that borrowed heavily from popular and costly designs of Donna Karan and Ralph Lauren. Four months after Kasaks rejoined AnnTaylor, the company’s same-store sales were up ten percent.

After reassuring the customer of the quality of AnnTaylor merchandise, Kasaks sought a strategy for keeping prices reasonable. Toward that end, she explored several manufacturing options, finally reaching an agreement with Cygne Designs for the manufacture of apparel through a joint venture called CAT. A private-label company with factory contracts mainly over-seas, Cygne worked with AnnTaylor to produce items made to specification more cheaply and quickly. As a result, what few designer labels the AnnTaylor stores stocked nearly disappeared, and lines of casual and weekend clothes were added, as were lines of petite sizes and whole new lines meant to attract younger women.

By her own admission, Kasaks worked hard to stay in touch with suppliers and customers. “This is very much a business of relationships,” she was quoted as saying in a 1995 Chain Store Executive article, adding “And as a symbol of this business, I need to stay out there.” Thus she visited on average 100 stores a year, refused to fly first class on business trips “because it is something that most AnnTaylor customers do not do on a regular basis,” and tried to see that overseas factories maintained responsible manufacturing and production practices.

Sales at new stores opened in 1993 grew an impressive 13.6 percent by March 1994, and the Merrill Lynch Capital Partners and other affiliates still holding 52 percent of AnnTaylor’s stock prepared to make another public offering. During the first six months of 1994, same-store sales grew 10.6 percent, while other popular specialty stores, such as The Gap and Nordstrom’s, were reporting gains of less than half that amount. By year’s end, the company’s sales had increased considerably to $659 million with earnings of $32 million, as formerly loyal customers began to return to AnnTaylor, and analysts were hailing AnnTaylor as being “back on track.” A new fragrance line was introduced, five freestanding shoe and accessory stores were opened, and a mail-order catalog was launched in 1994. Kasaks also expanded AnnTaylor’s traditional career offerings to include casual clothes, denims, and petites. The company updated its systems and controls for supplying stores with merchandise. It opened a new business, AnnTaylor Loft, intended to have greater appeal to younger customers with its more fashionable, less basics-oriented approach.

The Loft was also an attempt to compete with discount apparel stores, the most potent threat to apparel specialty stores at that time because of the price deflation they caused in the moderate and lower priced lines. By early 1995, AnnTaylor was feeling this threat as it was forced to cut prices by ten to 15 percent. The board, in an attempt to maintain the company’s growth, tripled its capital-spending budget as plans were under-taken for further aggressive expansion. By the end of the year, however, AnnTaylor’s spectacular comeback was being labeled a flop. The spring line, which included cropped t-shirts and leather jackets in an attempt to woo the younger customer, had not sold well.

Kasaks attributed the company’s sales problems to the difficult retail environment, but others attributed them to Kasaks herself. Known for her mercurial disposition, she had ostensibly shaken up more than one staff meeting. More than a dozen executives, including the company’s senior vice-president and general merchandising manager, had resigned as AnnTaylor’s stock dipped from its December 1994 high of almost $45 to a low of $10 in October 1995. The company became unable to meet the conditions of its loans.

In April 1996, two shareholders filed a class action suit accusing the company of concealing its financial problems and hiding inventory. In September 1996, in an effort to salvage its ailing principal supplier, AnnTaylor bought Cygne’s 60 percent stake in CAT and Cygne’s AnnTaylor Woven Division. After 14 straight months of declining sales and losses or lower profits in five of six quarters, Kasaks resigned under pressure from the board in August 1996, replaced by J. Patrick Spainhour, former chief financial officer of Donna Karan International, as chief executive, and Particia DeRosa, former president of Gap Kids, as president and chief operating officer.

Key Dates:

1954:: Robert Liebskind opens the first AnnTaylor store in New Haven, Connecticut.
1977:: Liebskind sells his stores to Garfinckel, Brooks Brothers, Miller & Rhodes Corporation.
1981:: AnnTaylor, as part of Garfinckel, is acquired by Allied Stores Corporation.
1983:: Sally Frame Kasaks becomes president of the company.
1985:: Mark Shulman replaces Kasaks as chief executive officer.
1987:: The Campeau Corporation enacts a hostile takeover of Allied Stores.
1988:: The Campeau Corporation sells AnnTaylor to Merrill Lynch Capital Partners, Inc. and some of AnnTaylor’s management.
1991:: AnnTaylor goes public.
1992:: Sally Frame Kasaks returns to head AnnTaylor.
1996:: AnnTaylor buys Cygne’s stock in its joint ventures; J. Patrick Spainhour and Patricia DeRosa replace Kasaks.

In 1997, AnnTaylor invested heavily in advertising for its fall line of clothes, the more conservatively stylish, businesslike attire with which it had made its name. Sales remained sluggish through most of 1997, when sales for the entire company fell 2.1 percent. By 1998, however, the company seemed to have solidified its comeback. For this, AnnTaylor had its loyal customer base to thank, who, according to at least one analyst in the Milwaukee Journal Sentinel, kept coming back to browse the racks even after styles disappointed them. Sales for the year increased to $912 million, yielding profits of $39.3 million.

Sales at AnnTaylor continued to improve, albeit slowly, throughout 1999 and into 2000, when there was talk of a company buyout by May Department Stores. The company’s share price continued to be volatile throughout this period, reaching an April 1999 high of about $53, but dropping as low as about $15 in early 2000. By mid-2000, when AnnTaylor offered a new Internet shopping service to customers, the future of the company was still far from certain.

Principal Subsidiaries

AnnTaylor Inc.

Principal Divisions

AnnTaylor Loft; Anntaylor.com; AnnTaylor Factory Stores.

Principal Competitors

The Gap Inc.; Liz Claiborne Inc.; Donna Karan International Inc.

AnnTaylor Stores Corporation

views updated May 17 2018

AnnTaylor Stores Corporation

142 West 57th Street
New York, New York 10019
U.S.A.
Telephone: (212) 541-3300
Toll Free: (800) 342-5266
Fax: (212) 541-3379
Web site: http://www.anntaylor.com

Public Company
Incorporated: 1988
Employees: 13,000
Sales: $1.58 billion (2004)
Stock Exchanges: New York
Ticker Symbol: ANN
NAIC: 448120 Women's Clothing Stores

Through its wholly owned subsidiary, AnnTaylor Inc., AnnTaylor Stores Corporation is a retailer of women's apparel, with stores in major downtown city locations and shopping malls across the United States. Noted for its classic, tailored designs for career women, AnnTaylor strives to provide what is referred to as "a head to toe concept of dressing with an edited assortment of tasteful, fashion-updated classic apparel and accessories in a one-stop shopping environment." After a shaky sales spell in the 1990s brought on by a departure from the company's signature style, the company rebounded in large part due to the success and expansion of its AnnTaylor Loft stores in the early 2000s.

The 1950s–70s: From College Town Boutique to Manhattan

The original AnnTaylor store was founded in New Haven, Connecticut, in 1954, by Robert Liebskind. Interestingly, there was never an actual Ann Taylor; the name was simply selected to characterize the target customer. The company's line of classic clothing became popular and eventually new shops were opened primarily in such eastern college towns as New Haven, Providence, Boston, Cambridge, and Georgetown. In 1977, Liebskind sold his stores to Garfinckel, Brooks Brothers, Miller Rhodes Corporation (known as Garfinckels). Under new management, AnnTaylor stores began to spread rapidly during the late 1970s.

During this time, AnnTaylor began showcasing the work of Perry Ellis, who designed clothing for the AnnTaylor label. AnnTaylor also had exclusive contracts with Marimeko and other cutting-edge, upscale designers. The stores eventually began to offer European fashions, as management found that loyal AnnTaylor customers were generally willing to spend a little more for unique, less conservative styles but still less likely to pay the prices or risk the fashion statements available in designer boutiques. Moreover, by refraining from carrying a wide variety of designer labels and brands offered by department stores, AnnTaylor had less competition and thus more pricing flexibility; the company could also produce fast reactions to fashion trends and regional needs.

The value of AnnTaylor's name as a brand increased steadily, and the stores became increasingly popular. The flagship store for the company, on 57th Street in Manhattan, featured a chic restaurant on the third floor. The AnnTaylor customer during this time was characterized as a new breed of well-dressed career woman who favored classic fabrics in fashionable designs. Describing a 1978 AnnTaylor catalogue, one writer for Working Woman magazine noted that the catalogue showed "a duo of well-dressed working women ganging up on a would-be mugger, hitting him with their AnnTaylor purses. The message: The AnnTaylor woman might wear silk and cashmere, but watch out—she's taken karate."

The 1980s: A Series of New Owners and Management

In 1981, AnnTaylor, as part of Garfinckels, was acquired by Allied Stores Corporation and quickly became the most profitable among the group of Allied retailers, outperforming even Brooks Brothers and Bonwit Teller. Allied subsequently unloaded unprofitable subsidiaries and further polished its core stores' image of upscale, high-profile specialty and department stores. In 1983, Sally Frame Kasaks, who had started in the fashion industry as a salesperson, was named president of the company, and she served in that capacity until 1985, when she left to join Talbots and, eventually, Abercrombie & Fitch.

A new president and CEO, Mark Shulman, faced new challenges. A Canadian financier, Robert Campeau, was attracted by Allied's cache of healthy, upscale stores with recognizable names. In 1986, his Campeau Corporation made an overture to acquire Allied but was rebuffed. Campeau was tiny compared with Allied; it had 1985 revenues of $153 million, while Allied reported $4.1 billion for the same year. Nevertheless, in the leveraged buyout-crazed 1980s, it was not hard for Campeau to get financial backing. After securing $3 billion in credit, Campeau launched a hostile takeover of Allied. The final price for the deal was more than $5 billion by some estimates, and Campeau had to sell off many of Allied's units to pay for the purchase, retaining only the best performers, such as Brooks Brothers and AnnTaylor. By the end of 1987, more than $1 billion of Allied's holdings had been sold off, and Campeau was able to pay down some of its debts.

Although it was ahead of schedule on debt payments, Campeau was still feeling the effects of the transaction, earning only $44 million in the first three quarters of 1987. Moreover, its interest payments for that same time period were $244 million. Thus some analysts were surprised when Campeau quickly set its sights on Federated Department Stores, Inc., a giant holding company of department stores then three times the size of Allied. With more than $4 billion in fresh loans, Campeau initiated a similar takeover, again increasing the initial per-share offer, until the final cost for Federated reached $6.6 billion. Campeau sold off Brooks Brothers to a British department store to get cash for its debts and for Federated stock. Although Campeau vowed he would not sell AnnTaylor, the retailer was put on the block by June 1988, when Campeau claimed that AnnTaylor's spot in specialty retailing no longer complemented Campeau's department store holdings. At the time, AnnTaylor had 100 stores nationwide and accounted for 8 percent of Allied's $3.96 billion in sales in 1988. AnnTaylor was the last of Allied's specialty stores. Proceeds from the sale would go toward Allied's bank debt, as well as for Federated stock.

It was not hard to find a buyer for AnnTaylor. Joseph E. Brooks, formerly the chief executive officer of Lord & Taylor, led a group of investors that included Merrill Lynch Capital Partners, Inc. and some of AnnTaylor's management. The price paid was $430 million, which, to some observers, seemed a tad high for a company that, like many companies in the women's apparel industry, had recently reported flat earnings. In fact, although AnnTaylor had more than 36 percent annual growth in both earnings and sales between 1983 and 1987, its earnings seemed to have peaked in 1986. Expectations soared, however, now that Brooks was in charge.

Brooks was noted for making Lord & Taylor over into an upscale store offering classic merchandise. Under his leadership, Lord & Taylor had expanded from 19 to 46 units and sales had quadrupled. Brooks moved quickly at AnnTaylor, bringing in a new management team, some of whom had been with him at Lord & Taylor, including his son, Thomas H.K. Brooks, who was named AnnTaylor's president. Faced with staggering interest payments and a tricky debt-to-equity load, the company focused on rapid expansion and cost-cutting tactics.

1990s: Hard Times in the Industry; Instability at Home

By 1991, AnnTaylor had spread as far from its East Coast roots as Jackson, Mississippi, and now boasted 58 new outlets and a total of 176 stores. With new stores helping to boost sales, Brooks felt confident enough to make bids for Saks Fifth Avenue and Bloomingdale's. He was outbid for Saks, however, and the $1 billion he offered for Bloomingdale's failed to tempt its owner, Federated Stores. With the debt load still pressuring AnnTaylor to perform, the company's buyout bosses proposed a public offering of AnnTaylor stock. The industry was limping and a stock offering seemed a good way to raise equity enough to tide AnnTaylor over the rough spots. Despite the fact that AnnTaylor was not faring well in same-store sales, the offering went well. Seven million shares were sold at $26 per share, providing the cash flow necessary to continue planned expansions.

The offering also increased AnnTaylor's burden to perform well in sales and earnings growth, however, and it was in the face of such pressures that some decisions were made that would eventually prove detrimental to the company. The new management decided that the typical AnnTaylor customer of 1990 was not as affluent as its earlier clientele had been, and, in an effort to broaden its appeal and cut expenses, the company began using fabrics of lesser quality for the first time.

Management also opted to end AnnTaylor's long and profitable relationship with Joan & David shoes, a product that had accounted for roughly 14 percent of AnnTaylor's sales for 30 years and had a fine reputation of its own, pulling many customers into AnnTaylor stores. AnnTaylor began offering its own line of shoes instead, at about half the price. Early reviews of these shoes bordered on snide, and earnings and revenues became weak. The stock collapsed and some stockholders sued, alleging misrepresentation of the facts by the prospectus that accompanied the public offering.

Company Perspectives:

AnnTaylor is a premier American specialty apparel retailer for the professional woman. Over the company's fifty year heritage we have become a well-known resource for quality suits, separates, dresses, shoes, and accessories with a feminine, polished approach to updated classic style. The company meets the needs of modern women by providing a full range of career, casual and occasion offerings in one location. We plan collections with versatile styles that coordinate not only from head-to-toe, but also from season-to-season, so that our client can build a full wardrobe from AnnTaylor. Our dedication to helping her be at her best has led to an exceptional level of enduring client loyalty.

Then, in December 1991, Joseph E. Brooks abruptly announced his retirement from his position as chairman. His son, Thomas Brooks, had quit the presidency just as suddenly a few weeks earlier, as had Gerald H. Blum, the company's vice-chairman. With their company suddenly being run by a committee, stockholders and investors became anxious. The company had lost about two-thirds of its market value since going public in 1991 and was losing its most loyal customers daily. That year, AnnTaylor lost $15.8 million on sales of $438 million.

In February 1992, AnnTaylor wooed former President Sally Frame Kasaks back. Her first action, like Brooks's, was to install a solid management team. Kasaks chose a primarily female management staff, composed of seasoned veterans of the specialty retail trade. Kasaks then worked to reestablish AnnTaylor's reputation for high-quality clothing, getting rid of the cheap synthetic fabrics and overseeing a new autumn line of clothes that borrowed heavily from popular and costly designs of Donna Karan and Ralph Lauren. Four months after Kasaks rejoined AnnTaylor, the company's same-store sales were up 10 percent.

After reassuring the customer of the quality of AnnTaylor merchandise, Kasaks sought a strategy for keeping prices reasonable. Toward that end, she explored several manufacturing options, finally reaching an agreement with Cygne Designs for the manufacture of apparel through a joint venture called CAT. A private-label company with factory contracts mainly overseas, Cygne worked with AnnTaylor to produce items made to specification more cheaply and quickly. As a result, what few designer labels the AnnTaylor stores stocked nearly disappeared, and lines of casual and weekend clothes were added, as were lines of petite sizes and whole new lines meant to attract younger women.

By her own admission, Kasaks worked hard to stay in touch with suppliers and customers. "This is very much a business of relationships," she was quoted as saying in a 1995 Chain Store Executive article, adding "and as a symbol of this business, I need to stay out there." Thus she visited an average of 100 stores a year, refused to fly first class on business trips "because it is something that most AnnTaylor customers do not do on a regular basis," and tried to see that overseas factories maintained responsible manufacturing and production practices.

Sales at new stores opened in 1993 grew an impressive 13.6 percent by March 1994, and Merrill Lynch Capital Partners and other affiliates—still holding 52 percent of AnnTaylor's stock—prepared to make another public offering. During the first six months of 1994, same-store sales grew 10.6 percent, while other popular specialty stores, such as The Gap and Nordstrom's, were reporting gains of less than half that amount. By year's end, the company's sales had increased considerably to $659 million with earnings of $32 million, as formerly loyal customers began to return to AnnTaylor, and analysts were hailing AnnTaylor as being "back on track." A new fragrance line was introduced, five freestanding shoe and accessory stores were opened, and a mail-order catalogue was launched in 1994. Kasaks also expanded AnnTaylor's traditional career offerings to include casual clothes, denims, and petites. The company updated its systems and controls for supplying stores with merchandise. It opened a new business, AnnTaylor Loft, intended to have greater appeal to younger customers with its more fashionable, less basics-oriented approach.

The Loft was also an attempt to compete with discount apparel stores, the most potent threat to apparel specialty stores at that time because of the price deflation they caused in the moderate and lower priced lines. By early 1995, AnnTaylor was feeling this threat as it was forced to cut prices by 10 to 15 percent. The board, in an attempt to maintain the company's growth, tripled its capital spending budget as plans were undertaken for further aggressive expansion. By the end of the year, however, AnnTaylor's spectacular comeback was being labeled a flop. The spring line, which included cropped T-shirts and leather jackets in an attempt to woo the younger customer, had not sold well.

Kasaks attributed the company's sales problems to the difficult retail environment, but others attributed them to Kasaks herself. Known for her mercurial disposition, she had ostensibly shaken up more than one staff meeting. More than a dozen executives, including the company's senior vice-president and general merchandising manager, had resigned as AnnTaylor's stock dipped from its December 1994 high of almost $45 to a low of $10 in October 1995. The company became unable to meet the conditions of its loans.

Key Dates:

1954:: Robert Liebskind opens the first AnnTaylor store in New Haven, Connecticut.
1977:: Liebskind sells his stores to Garfinckel, Brooks Brothers, Miller Rhodes Corporation.
1981:: AnnTaylor, as part of Garfinckels, is acquired by Allied Stores Corporation.
1983:: Sally Frame Kasaks becomes president of the company.
1985:: Mark Shulman replaces Kasaks as chief executive officer.
1987:: The Campeau Corporation implements a hostile takeover of Allied Stores.
1988:: The Campeau Corporation sells AnnTaylor to Merrill Lynch Capital Partners, Inc. and some of AnnTaylor's management.
1991:: AnnTaylor goes public.
1992:: Sally Frame Kasaks returns to head AnnTaylor.
1996:: AnnTaylor buys Cygne Designs' stock in its joint ventures; J. Patrick Spainhour and Patricia DeRosa replace Kasaks.
1998:: AnnTaylor expands its AnnTaylor Loft Stores.
2001:: Katherine Lawther Krill is appointed president of Loft Division.
2002:: Loft stores rapidly expand; company posts most profitable third quarter in its history.
2003:: Kim Roy resigns as president of AnnTaylor Division.
2004:: Company moves back office work to Milford, Connecticut; celebrates 50th "ANNiversary."

In April 1996, two shareholders filed a class-action suit accusing the company of concealing its financial problems and hiding inventory. In September 1996, in an effort to salvage its ailing principal supplier, AnnTaylor bought Cygne's 60 percent stake in CAT and Cygne's AnnTaylor Woven Division. After 14 straight months of declining sales and losses or lower profits in five of six quarters, Kasaks resigned under pressure from the board in August 1996, replaced by J. Patrick Spainhour, former chief financial officer of Donna Karan International, as chief executive, and Patricia DeRosa, former president of Gap Kids, as president and chief operating officer.

In 1997, AnnTaylor invested heavily in advertising for its fall line of clothes, the more conservatively stylish, businesslike attire with which it had made its name. Sales remained sluggish through most of 1997, when sales for the entire company fell
2.1 percent. By 1998, however, the company seemed to have solidified its comeback. For this, AnnTaylor had its loyal customer base to thank, who, according to at least one analyst in the Milwaukee Journal Sentinel, kept coming back to browse the racks even after styles disappointed them. Sales for the year increased to $912 million, yielding profits of $39.3 million.

Sales at AnnTaylor continued to improve, albeit slowly, throughout 1999 and into 2000, when there was talk of a company buyout by May Department Stores. The company's share price continued to be volatile throughout this period, reaching an April 1999 high of about $53, but dropping as low as about $15 in early 2000. By mid-2000, when AnnTaylor offered a new Internet shopping service to customers, the future of the company was still far from certain.

The end of the1990s was spent expanding AnnTaylor's Loft spinoff which proved both popular and profitable for the company. As industry analysts predicted, some market share of the company's more expensive retail AnnTaylor stores was lost when AnnTaylor shoppers defected, becoming loyal Loft shoppers instead. AnnTaylor was not alone in "losing" customers; The Gap experienced the same effect when it opened its lower priced and trendier Old Navy stores. The company took note of the Loft stores' burgeoning success and by May 2000 AnnTaylor had 70 loft stores throughout the United States, with plans for further expansion.

In the early 2000s AnnTaylor was shoring up its internet business by partnering with a variety of internet service providers including ProfitLogic, Interworld, Convergys Corporation and Delano Technology. Internet retailing made the shopping experience easier for the average woman career professional and AnnTaylor capitalized on its appeal to working women, drawing them in with aggressive marketing and giving them the excellent customer service they demanded.

The company reached agreements with J.C. Penney's subsidiary JCP Logistics in June 2000 to provide distribution for its web-based retailing at www.anntaylor.com. In November 2000 AnnTaylor chose Interworld Commerce Suite to help power the company's growing e-tail business. AnnTaylor's reputation as a top-notch customer service provider at its retail stores was transferred to its web-based business as through its association with Interworld. Even more emphasis was placed on its internet shop when in January 2001 AnnTaylor chose Delano Velocity Marketing to assist with its e-marketing and client relations.

Sales had declined in the 1990s and by 2000 the company looked to recapture its lost market share. A campaign began with an emphasis on a return to its signature look and style—a classic style with solid wardrobe pieces for the career minded woman. The company was known for its classic mix and match outfits but had strayed toward trendier styles in the 1990s. Cathy Rano was hired at the AnnTaylor division as vice-president of design and charged to bring back the basics while updating color scheme trends and modernizing inventory along traditional fashion variations such as hemline length, lapel width, and jacket style.

The company decided to consolidate some of its operations in 2004. AnnTaylor's data center and some of its back-office work would move to Milford, Connecticut. The new building provided 42,000 square feet with a six-year lease. That same year marked the 50th anniversary of AnnTaylor and the company celebrated its milestone with a new advertising campaign shot by world renowned photographer Annie Leibovitz. The slogan chosen for the campaign was "I AM ANN TAYLOR" with ads featuring fashion icons from the past, as well as beautiful women who were beginning to grace the pages of fashionable women's magazines. The ads captured the return of the classic AnnTaylor look with a focus on its timeless yet modern design. AnnTaylor was refashioning itself and, despite inconsistent sales, attempting to solidify its market share by the mid-2000s.