Ann Taylor’s parent company has a new investor that sees a gold mine in the retailer’s shares.
Golden Gate Capital, which lately has reaped a bundle from its bets on Zale and Eddie Bauer, disclosed late Thursday it has amassed a 9.5-percent stake in Ann Inc., the apparel chain’s New York-based parent.
Ann shares surged more than 10 percent in after-hours trading, rising above the $40 mark to hit 52-week highs.
The San Francisco investment firm revealed its cache of nearly 4.4 million shares in a 13-D filing with the Securities and Exchange Commission, typically signaling an activist stance.
However, in a Thursday letter to the company, Golden Gate execs took pains to praise Ann Taylor’s management under CEO Kay Krill.
In addition to Ann notching same-store sales increases in 14 of the past 16 fiscal quarters, Golden Gate execs noted that the company has added 68 new stores during the past three years, even as it has repositioned its brands.
“We believe that [Ann Inc.] is a great business, with a thoughtful strategy, led by an extremely competent management team who has a long track record of success,” Golden Gate said in the letter.
Still, the investment firm said it believes Ann’s stock is “significantly undervalued,” and sees room for operational improvements in several areas.
Despite sluggish mall traffic that has dogged mall-based chains in recent seasons, Golden Gate said Ann can add more stores in the US and abroad, and believes the retailer’s sales can increase to as much as $400 per square foot.
Golden Gate said Ann also needs “a clear and aggressive omni-channel strategy,” and advocated the development of “sub-brands” and new accessories.
The company, in a statement, said it welcomes new investors.