During the period, which ended Nov. 3, the company's same-storesales dropped 0.4% year over year. This was due to a 4.4% fall atits 354 Ann Taylor stores and a 0.3% drop at the 500-unit AnnTaylor Loft division. Both chains were hurt by unseasonable warmweather during the quarter, management says.

Krill says she sees sales picking up this month because ofcolder weather. She is also encouraged by fourth-quarter revenuesbecause of perceived better product offerings, mores "seasonless"apparel that is not as impacted by weather, healthy inventorylevels, more gift-giving options in stores and the company'snewly-launched beauty line.

Ann Taylor is still on track to open its new "modern boomer"concept next fall, which Krill says could become a $1-billionbusiness. Additionally, the retailer is launching its first Loftoutlet stores next year. Ann Taylor currently operates 67 namesakefactory stores.