Ahead of the Bell: Ann Taylor Downgraded

Piper Jaffray analyst Neely J.N. Tamminga downgraded shares of Ann Taylor to "Neutral" from "Buy" in a note to clients Sunday evening. Tamminga noted that company stores were widely marking down merchandise, and said disappointing sales at the retailer's core stores, coupled with a difficult consumer spending environment, were casting doubt on the stock's growth potential.

"Given the lackluster performance at core Ann Taylor and our concern for the higher-margin Loft division's ability to offset this, we are taking a cautious outlook with respect to a turn in the company's operating performance," Tamminga wrote.

In addition, Tamminga lowered her 12-month price target for shares of Ann Taylor to $26 from $28 and cut her per-share earnings forecast for fiscal year 2009 to $1.76 from $1.85. She also cut her earnings-per-share forecast for 2010 to $2.02 from $2.14.

Separately, Oppenheimer & Co. analyst Roxanne Meyer echoed Tamminga's concern over the effect that lower consumer spending would have on retailers in a client note Monday morning. Meyer said that an earlier Easter and thus one less March shopping day coupled with poor spring weather raises questions about first-quarter performance in the broader retail sector.

Shares of New-York based Ann Taylor finished at $24.82 on Friday.