Six Months ended July 29, 2000 Compared to Six Months ended July 31, 1999

     The Company's net sales in the first six months of Fiscal 2000 increased to $583,320,000 from $515,147,000 in the first six months of Fiscal 1999, an increase of $68,173,000 or 13.2%. The increase is attributable to the opening of new stores and the expansion of existing stores and an increase in comparable store sales of 1.4%.

     Gross profit as a percentage of net sales increased to 50.1% in the first six months of 2000 from 49.9% in the first six months of 1999. This increase in gross margin primarily reflects improvements made in the Company's sourcing, merchandising and inventory management processes, which resulted in higher initial mark-ups and higher gross margins achieved on full price sales compared to the first six months of 1999 partially offset by aggressive end-of-season markdowns during the second quarter of 2000.

     Selling, general and administrative expenses, excluding certain nonrecurring expenses described below, were 39.7% of net sales in the first six months of 2000, compared to 38.0% of net sales in the first six months of 1999. Selling, general, and administrative expenses for the first six months of 2000 included approximately $3,300,000 of expenses relating to the development of the Company's proposed Internet e-commerce web site. Selling, general and administrative expenses as a percentage of net sales also reflected increases in tenancy expenses, and increases in Ann Taylor Loft store operations expenses and marketing expenses, in support of the Company's strategic initiatives to enhance the Ann Taylor brand, offset in part by leverage achieved on certain other expenses as a result of increased sales. The Company incurred a pre-tax nonrecurring charge of approximately $8,500,000 during the first quarter of fiscal 2000 in connection with an extensive review conducted with the Company's financial and legal advisors of various strategic approaches to enhance shareholder value.

     As a result of the foregoing, the Company had operating income, after taking into account the nonrecurring charge, of $46,738,000, or 8.0% of net sales, in the first six months of 2000, compared to operating income of $56,138,000, or 10.9% of net sales, in the first six months of 1999. Amortization of goodwill was $5,520,000 in each of the first six months of Fiscal 2000 and Fiscal 1999. Operating income, without giving effect to goodwill amortization, was $52,258,000, or 9.0% of net sales, in the 2000 period and $61,658,000, or 12.0% of net sales, in the 1999 period.

     Interest income was $1,270,000 in the first six months of Fiscal 2000 compared to $2,118,000 in the first six months of Fiscal 1999. The decrease was primarily attributable to lower cash on hand as a result of the Company's use of cash to repurchase shares of its common stock during the third and fourth quarters of Fiscal 1999.

     Interest expense was $3,626,000 in the first six months of Fiscal 2000 and $7,702,000 in the first six months of Fiscal 1999. The decrease in interest expense was primarily attributable to the net reduction in the Company's outstanding long term debt and other obligations and a decrease in the interest rate borne by the Company's remaining outstanding long term debt. During the second quarter of 1999, AnnTaylor Finance Trust redeemed its preferred securities, and Ann Taylor redeemed its 8-3/4% Notes. These redemptions were completed using, in part, the proceeds from the issuance by the Company, also during the second quarter of 1999, of its Convertible Debentures, which bear interest at a rate of 3.75% per annum.

     The income tax provision was $19,655,000, or 44.3% of income before income taxes, in the 2000 period, compared to $22,432,000, or 44.4% of income before income taxes and extraordinary loss, in the 1999 period. The effective income tax rate for both periods differed from the statutory rate primarily because of non-deductible goodwill amortization.

     The redemption of the outstanding 8-3/4% Notes on July 22, 1999 resulted in an extraordinary charge to earnings in the first six months of Fiscal 1999 of $962,000, net of income tax benefit, or $0.03 per share on a diluted basis.

     As a result of the foregoing factors, the Company had net income of $24,708,000, or 4.2% of net sales, for the first six months of 2000, compared to net income of $27,166,000 or 5.3% of net sales, for the first six months of 1999.

Financial Condition

     For the first six months of 2000, net cash provided by operating activities totaled $38,213,000, primarily as a result of earnings and noncash charges offset by an increase in merchandise inventories. Cash used for investing activities during the first six months of 2000 amounted to $39,357,000, for the purchase of property and equipment. Cash provided by financing activities during the first six months of 2000 amounted to $665,000, primarily as a result of the issuance of Company common stock under the Company's Associate Discount Stock Purchase Plan.

     Merchandise inventories were $154,691,000 at July 29, 2000, compared to inventories of $140,026,000 at January 29, 2000. Merchandise inventories at July 29, 2000 and January 29, 2000 included approximately $28,095,000 and $22,959,000, respectively, of inventory associated with the Company's sourcing division, which is primarily finished goods in transit from factories.

     At July 29, 2000, there were no borrowings outstanding under Ann Taylor's $125,000,000 senior secured revolving credit

facility ("the Credit Facility"). Loans outstanding under the Credit Facility at any time may not exceed $50,000,000. Maximum availability for loans and letters of credit under the Credit Facility is governed by a monthly borrowing base, determined by the application of specified rates against certain eligible assets.

     For Fiscal 2000, the Company's capital expenditures, which are primarily attributable to the Company's store expansion, renovation and refurbishment programs, and investment in information systems, are expected to total approximately $83,000,000. These expenditures also include increased capital expenditures related to the Company's proposed Internet e-commerce web site and related to enhancements to the material handling system at the Company's distribution center. For the six months ended July 29, 2000, capital expenditures of $39,357,000 were incurred. During the first six months of Fiscal 2000, the Company opened 3 new Ann Taylor stores and 27 Ann Taylor Loft stores, including 1 location that was converted from an Ann Taylor store. In addition, the Company completed the expansion of 2 Ann Taylor stores. For the full fiscal year 2000, the Company expects to open a total of 18 new Ann Taylor stores and 62 Ann Taylor Loft stores (including 2 Ann Taylor stores being converted to Ann Taylor Loft stores), and to expand or relocate a total of 4 Ann Taylor stores.

     For Fiscal 2001, the Company expects its capital expenditures to total approximately $98,000,000, which are primarily attributable to the Company's store expansion, renovation and refurbishment programs, and investment in information systems. In Fiscal 2001, the Company expects to open approximately 20 Ann Taylor stores and 70 Ann Taylor Loft stores.

     In order to finance its operations and capital requirements, the Company expects to use internally generated funds, trade credit and funds available to it under the Credit Facility. The Company believes that cash flow from operations and funds available under the Credit Facility are sufficient to enable it to meet its on-going cash needs for its business, as presently conducted, for the foreseeable future.

     On May 18, 2000, the Board of Directors of the Company adopted a Stockholder Rights Plan, pursuant to which Rights were distributed as a dividend at the rate of one Right for each share of Common Stock of the Company held by stockholders of record as of the close of business on May 30, 2000. Each Right entitles stockholders to buy one unit of a share of a new series of preferred stock for $125. The Rights generally are exercisable only if a person or group acquires beneficial ownership of 15% or more of the Voting Power of the Company as represented by the Company's Common Stock or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 15% or more of the Voting Power of the Company as represented by the Company's Common Stock. The Rights will expire on May 18, 2010.

(a)   Exhibits:
        27    Financial Data Schedule



    (b)     Reports on Form 8-K:

              The  Company  filed a  report  dated  June  21,  2000  with  the
        Commission  on Form 8-K on June 26,  2000,  reporting  that the United
        States Court of Appeals for the Second  Circuit  vacated the dismissal
        of  the  amended  complaint  in the  purported  class  action  lawsuit
        against the Company, Ann Taylor,  certain present and former directors
        and  officers of the  Company  and Ann Taylor and Merrill  Lynch & Co.
        and certain of its  affiliates  (Novak v.  Kasaks,  et al., No. 96 CIV
        3073 (S.D.N.Y. 1996)).

                                          AnnTaylor Stores Corporation


Date:    September 8, 2000                By: /s/ J. Patrick Spainhour
       ---------------------------            ------------------------
                                                  J. Patrick Spainhour
                                                  Chairman and Chief Executive
                                                      Officer




Date:    September 8, 2000                By: /s/ Barry Erdos
       ---------------------------            -----------------------
                                                  Barry Erdos
                                                  Executive Vice President -
                                                   Chief Financial Officer and
                                                      Treasurer