Over 50% of Ann Taylor merchandise is outsourced from China. With Chinese inflation hitting 7.2% in May 2010, the firm may have to seek other production sources to ease pressure on EBITDA margins.
ANN reports a loss of $13.4M in the third quarter, while same-store sales declined 19.4%.
Despite having weak 2nd quarter earnings and same store sales, investors pumped money into Ann Taylor stores stock, showing faith in its recent improvement.