Ann Taylor was founded by Robert Liebeskind, son of a high-class dressmaker, and dates back to 1954. At the time Ann Taylor was a bestselling dress design that was gifted to Robert by his father for good luck. The design of this dress brought to life the “well-dressed woman” and the Ann Taylor legacy was born. Robert Liebeskind opened his first Ann Taylor store in New Haven, Connecticut where the first wave of new stores opened primarily in eastern college towns. Then in 1977, Liebeskind sold his stores to Garfinckle, Brooks Brothers, Miller Rhodes Corporation (http://nyjobsource.com/anntaylor.html, 2011). The Ann Taylor stores refrained from carrying a large variety of name brands, like most department stores, which gave them an advantage, less competition and more pricing flexibility (http://www.fundingguniverse.com). In the 1980’s, Ann Taylor changed hands three times, once by Allied Stores Corporation then by Canadian financier Robert Campeau who sold it to Joseph Brooks, the founder of Lord and Taylor. Brooks’ focus to become successful with Ann Taylor was rapid expansion and cost cutting tactics. By 1991, Ann Taylor consisted of 176 retail stores and 53 outlet stores but, the stores were still carrying a heavy debt load. The industry was slowing, so it seemed like a good idea to offer stock options. The offering went well and seven million shares were sold at $26 per share, providing the cash flow necessary to continue planned expansions (Furman, 1995). The offering also increased Ann Taylor’s burden to perform well in sales and earnings growth however, it was in the face of such pressures that some decisions were made that would eventually prove detrimental to the company.
New management decided that the typical Ann Taylor customer of the 90’s was not as wealthy as its earlier clientele had been, so in an effort to broaden its appeal and cut expenses, the company began using fabrics of lesser quality for the first time. Another poor decision was made to stop carrying Ann Taylor’s profitable shoe line, which accounted for fourteen percent of sales and was often one of the items that drew customers into the store. Ann Taylor began offering its own line of shoes instead, at about half the price, but these were not accepted well by its customers (McNally, 1994). The stock collapsed and some stockholders sued, alleging misrepresentation of the facts by the prospectus that accompanied the public offering. Soon after the poor decisions were made, Brooks announced his retirement. Coincidently, Brook’s son Thomas Brooks, President of Ann Taylor and the company’s vice Chairman, Gerald Blum resigned just a few weeks earlier. The stock holders and investors became anxious as the company was suddenly being run by a committee. Sally Frame Kasacks was persuaded back to Ann Taylor by the committee and worked on rebuilding a strong management team. Profits increased nearly 15 percent in one year (Steinhauer, 1995). With good financials insight, the company decided to open the Loft stores which were an attempt to compete with discount apparel stores and attract the younger customers. These stores experienced a bad financial year and the committee blamed Kasacks and her style decisions; she resigned and a new president was brought on board. Sales had declined in the 1990’s 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. Ann Taylor was refashioning itself and, despite inconsistent sales, attempting to solidify its market share by the mid 2000. Within the first year of the recession Ann Taylor closed 203 stores and laid off thousands of employees after their sales dropped by 19 percent and then dropped another 43 percent a year later. With its costs finally in line, the key to recovery became growing store sales revenue without letting...
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