Ann Inc (ANN), Ralph Lauren Corp (RL): Retail, Women, and Labor Force Participation

Sometimes changes are abrupt and sometimes they are hidden. Slowly the U.S. labor market has become more flexible and a general reflection of the overall population. Ann Inc (NYSE:ANN) is a specialty retailer that markets toward the professional working women and it offers a great way to play this specific demographic.

Will the Market of Professional Working Women Continue to Grow?

Predictions about the future are especially dangerous. Regardless, a little digging can expose trends that give a good idea where the future is heading.

Women graduate college at much higher rates than men. In 2003 it was reported that there were 1.35 female graduates for every male graduate of a four year college. Even with this positive trend, women tend to earn less then men. The wage differential between women and men has decreased since the 1950, but there are still improvements to be made. Overall, high levels of education and the continued decrease in male labor force participation bode well for women’s professional future.

US Labor Force Participation Rate data by YCharts

The Story of Ann Taylor

The company started just after World War II. Slowly but surely the firm has continued to grow its main brands; Ann Taylor and LOFT.

Ann Inc (NYSE:ANN) is well known within its main demographic and has over a million likes on its Facebook page, but it is still a specialty operation. Only in the fall of 2012 was the first Canadian store opened. Unlike more diversified competitors, the company has not over expanded. International expansion offers serious growth potential and Canada is only the beginning.

ANN EBITDA Quarterly data by YCharts

As a company Ann Taylor showed strong growth after the end of the 2008 recession. With a three year revenue growth rate of 9.37% and return on investment of 26.6% the firm shows great promise. International expansion should help to maintain growth and the recent addition of international shipping for online orders shows that the firm is starting to embrace technology. At a price to earnings ratio close to 15, the company offers growth at a reasonable price.

What about the Competition?

Ralph Lauren Corp (NYSE:RL) is much larger than Ann Taylor and serves a more diversified audience. A quick look inside their retail stores reveals a host of men’s and women’s clothing. In the name of growth, the company is trying to move beyond apparel into accessories. Between jewelry, watches, and golf products, there are a number of ways it is increasing the reach of the brand.