Ann Taylor parent taps JPMorgan to weigh potential sale

Ann Inc has hired JPMorgan Chase & Co (JPM.N) to explore strategic alternatives, including a potential sale of the women's retailer, according to people familiar with the matter.

The hiring of an investment bank comes as the Ann Taylor owner, best known for its women's suits and office wear, faces pressure from hedge funds Engine Capital LP and Red Alder LLC to consider selling itself to a private equity firm or a large international retailer.

Shares of Ann were up as much as 7.6 percent and rose 6 percent at $42.33 at midday Tuesday, giving it a market capitalization of more than $1.9 billion.

The stock topped $40 per share on Monday after the hedge funds, which together control more than 1 percent of the stock, said the company could be worth $50 to $55 per share to a potential buyer.

Representatives for Ann and JPMorgan declined to comment.

Earlier this year, private equity firm Golden Gate Capital took a 9.5 percent stake in Ann, saying the stock was undervalued.

In the second quarter, Ann reported earnings of 70 cents per share, down from 76 cents in the same quarter a year earlier. The company also cut its annual sales outlook.

Ann's margins have been hurt by increased in-store promotions across the retail industry, the company said on its earnings call.

Ann operates 1,040 Ann Taylor, Ann Taylor Factory, Loft and Loft Outlet stores in 47 states, Washington D.C., Puerto Rico and Canada.