SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                
                            FORM 10-K
(Mark One)
X  ANNUAL  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF   THE
   SECURITIES EXCHANGE ACT OF 1934 .
           For the fiscal year ended January 31, 1998
                               OR
   TRANSITION  REPORT  PURSUANT TO SECTION 13  OR  15(d)  OF  THE
   SECURITIES EXCHANGE ACT OF 1934.
                                
                   Commission File No. 1-11980
                         
                         ANNTAYLOR, INC.
     -----------------------------------------------------
     (Exact name of registrant as specified in its charter)


          DELAWARE                               51-0297083
-------------------------------    --------------------------------------
(State or other jurisdiction of    (I.R.S. Employer Identification Number)
incorporation or organization)



    142 West 57th Street, New York, NY                 10019
  ---------------------------------------            --------
  (Address of principal executive offices)          (Zip Code)
                         
                         
                         
                              (212) 541-3300
           ---------------------------------------------------
           (Registrant's telephone number, including area code)
                                
   Securities registered pursuant to Section 12(b) of the Act:

   
    Title of Each Class              Name of each exchange on which registered
8-3/4% Subordinated Notes due 2000           The New York Stock Exchange

   
   Securities registered pursuant to Section 12(g) of the Act:
                              None.
     
     
     Indicate by check mark whether registrant (1) has filed  all
reports  required  to be filed by Section  13  or  15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.   Yes X      No       .

     As of April 2, 1998,  1 share of Common Stock  was outstanding.

           Documents Incorporated by Reference:  None
     
     The  registrant  meets the conditions set forth  in  general
Instruction I(1)(a) and (b) of Form 10-K and is therefore  filing
this form with the reduced disclosure format.


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<PAGE 1>
                             PART I
                                



ITEM 1.   Business
--------------------

General
-------
     
     AnnTaylor, Inc. (the "Company" or "Ann Taylor") is a leading
national  specialty retailer of better quality  women's  apparel,
shoes  and accessories sold primarily under the Ann Taylor  brand
name.   The  Company  believes that  "Ann  Taylor"  is  a  highly
recognized  national brand that defines a distinct fashion  point
of  view.   Ann  Taylor  merchandise represents  classic  styles,
updated to reflect current fashion trends.  The Company's  stores
offer  a full range of career and casual separates, weekend wear,
dresses,  tops, accessories and shoes, coordinated as part  of  a
total  wardrobing  strategy.  This total wardrobing  strategy  is
reinforced by an emphasis on customer service.  Ann Taylor  sales
associates   are  trained  to  assist  customers  in  merchandise
selection  and  wardrobe coordination, helping them  achieve  the
"Ann  Taylor  look"  while  reflecting  the  customers'  personal
styles.
     
     As  of January 31, 1998, the Company operated 324 stores  in
41  states  and  the District of Columbia, under  the  names  Ann
Taylor, Ann Taylor Factory Store and Ann Taylor Loft.  Of the 283
stores  operated under the Ann Taylor name, approximately  three-
quarters  are  located  in regional malls and  upscale  specialty
retail  centers, with the balance located in downtown and village
locations.  These stores represent the Company's core merchandise
line.   The Company believes that the customer base for  its  Ann
Taylor stores consists primarily of relatively affluent, fashion-
conscious women from the ages of 25 to 55, and that the  majority
of its customers are working women with limited time to shop, who
are  attracted  to  Ann Taylor by its focused  merchandising  and
total   wardrobing  strategies,  personalized  customer  service,
efficient store layouts and continual flow of new merchandise.
     
     In  1995,  the  Company began testing  Ann  Taylor  Loft,  a
separate  moderate-price store concept for women  who  appreciate
the Ann Taylor style but are more cost conscious.  Merchandise is
designed  uniquely  for these stores and is sold  under  the  Ann
Taylor  Loft label.  As of January 31, 1998, the Company operated
27 Ann Taylor Loft stores, all located in factory outlet centers.
The  Company believes that the Ann Taylor Loft concept represents
an  opportunity  for  the Company to compete in  the  moderately-
priced  women's  apparel market.  In 1998, the Company  plans  to
open  Ann  Taylor Loft stores outside the factory  outlet  center
environment for the first time, primarily in regional  malls  and
strip shopping centers.
     
     The  Company  also  operates 14  stores  in  factory  outlet
centers   that  serve  primarily  as  a  clearance  vehicle   for
merchandise from both Ann Taylor and Ann Taylor Loft stores.  The
Company is introducing a limited selection of original priced Ann
Taylor Loft merchandise to many of these stores as well, so  that
the  Company's emphasis on wardrobing can be represented in these
stores at all times.
     
     The Company was incorporated under the laws of the state  of
Delaware  in 1986.  All of the outstanding capital stock  of  the
Company,  consisting of one share of common stock,  is  owned  by
AnnTaylor  Stores Corporation ("ATSC").  Ann Taylor was  acquired
by ATSC in a leveraged buyout transaction in 1989.
     

Sourcing Acquisition
---------------------
     
     The  Company  believes  that procuring merchandise  directly
from manufacturers improves the Company's competitive position by
providing  it with greater control over pre-production processes,
resulting  in  greater  consistency in  merchandise  quality  and
sizing, and by reducing merchandise costs.  To this end,  in  May
1992, the Company commenced a joint venture, known as "CAT", with

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<PAGE 2>

     
     
     
one of its private  label vendors, Cygne Designs, Inc. ("Cygne").   
CAT was  formed  for  the  purpose  of acting  as  a  sourcing  agent
exclusively  for Ann Taylor, placing merchandise orders  directly
with  manufacturers.  Until September 1996, the Company  owned  a
minority  interest  in  CAT.   In  September  1996,  the  Company
acquired  Cygne's entire interest in CAT, which became  a  wholly
owned  subsidiary of the Company, as well as certain assets  (the
"Assets")  of  the  Ann  Taylor  Woven  Division  of  Cygne  (the
"Division")  that  Cygne  used in sourcing  merchandise  for  Ann
Taylor.   The  Company's sourcing division is now  known  as  Ann
Taylor Global Sourcing ("ATGS").
     
     In consideration for Cygne's interest in CAT and the Assets,
ATSC and the Company paid (i) 2,348,145 shares of common stock of
ATSC  having  an  aggregate value, as of the Effective  Date,  of
$36,000,000,  (ii) $3,200,000 in cash payments for inventory  and
fixed  assets  and  (iii) approximately  $6,500,000  in  cash  in
settlement  of open accounts payable by Ann Taylor to  Cygne  for
merchandise delivered by Cygne prior to the closing.  The Company
also assumed certain liabilities related to the operations of the
Division.    The  purchase  price  was  subject  to  post-closing
adjustments  based  upon  final determination  of  the  value  of
certain of the assets purchased and liabilities assumed.   As  of
February  1,  1997, certain post-closing adjustments reduced  the
net  cash  paid  for inventory and fixed assets to  approximately
$227,000.   The  total purchase price has been allocated  to  the
tangible  and intangible assets and liabilities of  CAT  and  the
Division  that  were  acquired,  based  on  estimates  of   their
respective  fair values.  The excess of the purchase  price  over
the  fair  value  of  the  net assets acquired  was  recorded  as
goodwill and is being amortized on a straight-line basis over  25
years.
     
     Pursuant  to  the terms of a Stockholders Agreement  entered
into at the time of the Sourcing Acquisition, ATSC registered the
sale  of the shares of ATSC Common Stock issued to Cygne as  part
of  the  consideration for the acquisition.   Cygne  subsequently
sold,  pursuant to this registration statement, all of the shares
of ATSC Common stock issued to it by ATSC.


ITEM 2. Properties
------------------
     
     As of January 31, 1998, the Company operated 324 stores, all
of  which  were leased.  The store leases typically  provide  for
initial terms of ten years, although some leases have shorter  or
longer initial periods, and grant the Company the right to extend
the  term for one or two additional five-year periods.   Most  of
the  store  leases require Ann Taylor to pay a specified  minimum
rent, plus a contingent rent based on a percentage of the store's
net sales in excess of a specified threshold.  Most of the leases
also  require Ann Taylor to pay real estate taxes, insurance  and
certain common area and maintenance costs.
     
     Ann  Taylor leases corporate offices at 142 West 57th Street
in  New  York City and office space at 1372 Broadway in New  York
City.   The  Company  also  leases office  space  in  New  Haven,
Connecticut.
     
     Ann Taylor's wholly owned subsidiary, AnnTaylor Distribution
Services, Inc., owns its 256,000 square foot distribution  center
located   in   Louisville,  Kentucky.   Nearly  all  Ann   Taylor
merchandise  is distributed to the Company's stores through  this
facility.  The parcel on which the Louisville distribution center
is located comprises approximately 20 acres and could accommodate
possible future expansion of the facility.


ITEM 3.  Legal Proceedings
--------------------------
     
     On  April  26,  1996, certain alleged stockholders  of  ATSC
filed  a  purported  class action lawsuit in  the  United  States
District  Court Southern District of New York, against ATSC,  the
Company,  certain officers and directors of the Company,  Merrill
Lynch  &  Co., Inc. ("ML&Co.") and  certain affiliates of  ML&Co.
(Novak v. Kasaks, et. al., No. 96 CIV 3073 (S.D.N.Y. 1996)).  The
complaint  alleged  causes  of action  under  Section  10(b)  and
Section 20(a) of the Securities Exchange Act of 1934, as amended, by

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<PAGE 3>

     
     
     
     
alleging that ATSC and the other defendants engaged  in  a
fraudulent scheme and course of business that operated a fraud or
deceit  on  purchasers of ATSC's common stock during  the  period
commencing  February 3, 1994 through May 4, 1995 due  to  alleged
false and misleading statements about ATSC and the Company.   The
complaint  sought, among other things, certification as  a  class
action  on  behalf of all purchasers of common stock  during  the
period  commencing  February 3, 1994 through  May  4,  1995,  the
awarding  of compensatory damages to the plaintiffs and purported
members  of  the  class,  the awarding of costs,  including  pre-
judgment  and post-judgment interest, reasonable attorneys'  fees
and  expert witness fees to the plaintiffs and purported  members
of  the  class and equitable and/or injunctive relief.  On  March
10,  1998,  the Court granted the defendants' motions to  dismiss
the  complaint.   The  Court found that the complaint  failed  to
state  a  claim upon which relief may be granted, and  failed  to
plead  fraud with particularity and an inability to do  so.   The
Court's  Opinion grants the plaintiffs leave to amend and re-file
the  complaint within thirty days of the date of the Opinion, and
an  amended  complaint was filed by the plaintiffs  on  April  9,
1998.  The Company believes that the amended complaint is without
merit  and  intends to continue to defend the action  vigorously.
As  the  case  is in preliminary stages, any liability  that  may
arise from this action cannot be predicted at this time.
     
     The  Company is also a party to routine litigation  incident
to  its  business.    Although the amount of any  liability  that
could  arise  with respect to these actions cannot be  accurately
predicted, in the opinion of the Company, any such liability will
not  have  a  material adverse effect on the financial  position,
results of operations and liquidity of the Company.
     
======================================================================     
<PAGE 4>
     
                             PART II
                                
                                
     
     
     
ITEM   5.  Market for Registrant's Common Equity and Related 
------------------------------------------------------------
           Stockholder Matters
           --------------------
     
     There  is  no  public  market for the common  stock  of  the
Company.  All of the outstanding stock of the Company, consisting
of one share of common stock, is owned by ATSC.
     
     From  time  to time, the Company pays dividends to  ATSC  in
amounts  sufficient to fund ATSC's operating expenses.   Further,
in   connection   with  the  8-1/2%  Company-Obligated   Mandatorily
Redeemable   Convertible  Preferred  Securities  (the  "preferred
securities")  issued  by  ATSC's  financing  vehicle,   AnnTaylor
Finance  Trust (the "Trust"), the Company makes regular  dividend
payments  to  ATSC  in amounts sufficient to allow  ATSC  to  pay
interest on certain debentures issued to the Trust.  The  payment
of  dividends  by  Ann  Taylor  to ATSC  is  subject  to  certain
restrictions  under  the  Company's bank  credit  agreement,  the
indenture  relating to the Company's 8-3/4% Subordinated  Notes  due
2000   and  the  receivables  facility.   See  Note  2   to   the
Consolidated Financial Statements of the Company.


ITEM  7. Management's Discussion and Analysis of Financial Condition
--------------------------------------------------------------------
         and Results of Operations
         -------------------------

Fiscal 1997 Compared to Fiscal 1996
-----------------------------------
     
     The  Company's net sales decreased to $781,028,000 in Fiscal
1997 from $798,117,000 in Fiscal 1996, a decrease of $17,089,000,
or  2.1%.  Comparable store sales for Fiscal 1997 decreased  5.5%
compared  to Fiscal 1996.  Management believes that the decreases
were  primarily  attributable  to lower  customer  acceptance  of
certain  of the Company's merchandise offerings and, to a  lesser
extent,  planned decreases in promotional inventory  for  certain
periods during the year.
     
     Gross profit as a percentage of net sales increased to 47.3%
in  1997  from  44.4%  in  1996.   This  increase  was  primarily
attributable  to  benefits  achieved by  the  Company's  sourcing
division.
     
     Selling,   general   and   administrative   expenses    were
$308,232,000,  or  39.5%  of  net sales,  in  1997,  compared  to
$291,027,000,  or 36.5% of net sales, in 1996.  The  increase  in
selling,  general and administrative expenses as a percentage  of
net sales was primarily attributable to increased tenancy expense
related  to  increased  retail  square  footage,  investments  in
certain  strategic  initiatives, such as marketing  and  enhanced
merchandising  information  systems, and  decreased  leverage  on
fixed expenses due to lower sales in 1997.
     
     Operating  income increased to $50,000,000, or 6.4%  of  net
sales,  in 1997 from $46,461,000, or 5.8% of net sales, in  1996.
Operating  income in 1996 was reduced by $3,500,000, or  0.4%  of
net  sales,  representing the estimated costs  of  the  Company's
obligations  under  the former Chairperson's employment  contract
following  her  resignation in August 1996,  and  by  a  one-time
charge  of  $3,600,000,  or 0.4% of net sales,  relating  to  the
planned  closing  of  all  nine Ann  Taylor  Studio  shoe  stores
announced   in  January  1997.   Amortization  of  goodwill   was
$11,040,000,  or  1.4%  of  net  sales,  in  1997   compared   to
$10,086,000,  or  1.3% of net sales, in 1996.   Operating  income
without  giving  effect to such amortization was $61,040,000,  or
7.8%  of  net  sales, in  1997 and $56,547,000, or  7.1%  of  net
sales, in 1996.
     
     Interest  expense  was  $19,989,000  in  1997  compared   to
$24,416,000  in  1996.   The decrease  in  interest  expense  was
primarily attributable to a decrease in the Company's outstanding
long-term  debt,  resulting in part from the prepayment  in  July
1997 of a $24,500,000 term loan referred to below, and to greater
interest  income  earned on cash on hand.  The  weighted  average
interest  rate  on  the  Company's  outstanding  indebtedness  at
January 31, 1998 was 8.59% compared to 8.63% at February 1, 1997.

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<PAGE 5>
     
     
     
     
     The income tax provision was $17,466,000, or 59.3% of income
before  income taxes and extraordinary loss, in the  1997  period
compared to $12,975,000, or 60.0% of income before income  taxes,
in  1996.   The effective tax rates for both periods were  higher
than the statutory rates, primarily as a result of non-deductible
goodwill expense.
     
     On  July 2, 1997, the Company used available cash to  prepay
the  outstanding balance of a $24,500,000 term loan due September
1998.  This loan repayment resulted in an extraordinary charge to
earnings in Fiscal 1997 of $173,000, net of income tax benefit.
     
     As  a  result of the foregoing factors, the Company had  net
income  of $11,824,000, or 1.5% of net sales, for 1997,  compared
to net income of $8,667,000, or 1.1% of net sales, for 1996.
     


ITEM  8. Financial Statements and Supplementary Data
------------------------------------------------------
     
     The  following  consolidated  financial  statements  of  the
Company  for the years ended January 31, 1998, February  1,  1997
and  February 3, 1996 are included as a part of this Report  (See
Item 14):
     
     Consolidated  Statements of Operations for the fiscal  years
        ended January 31, 1998, February 1, 1997 and February  3,
        1996.
     
     Consolidated  Balance  Sheets as of  January  31,  1998  and
        February 1, 1997.
     
     Consolidated  Statements of Cash Flows for the fiscal  years
        ended January 31, 1998, February 1, 1997 and February  3,
        1996.
     
     Notes to Consolidated Financial Statements.
     
     
ITEM 9.  Changes in and Disagreements with Accountants on Accounting 
--------------------------------------------------------------------
         and Financial Disclosures
         -------------------------
     
          None.

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<PAGE 6>
                                
                             PART IV
     
     
     
     
ITEM  14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
----------------------------------------------------------------------------
  (a)    List of documents filed as part of this Annual Report:
                                    
          The   following  consolidated financial  statements of the 
          Company and the  independent auditors' report are included 
          on pages 12 through 29  and are filed as part of this Annual 
          Report:
                  
          Consolidated Statements of Operations  for  the fiscal  years  
          ended January 31, 1998, February  1,  1997 and  February 3, 1996; 
          Consolidated Balance Sheets as  of January  31,  1998  and  
          February 1,  1997;  Consolidated Statements  of  Cash  Flows for 
          the  fiscal  years  ended January 31, 1998, February 1, 1997 and 
          February 3,  1996; Notes  to  Consolidated Financial Statements; 
          Independent Auditors' Report.
        
  (b)     Reports on Form 8-K
                   
           The Company filed a report with the Commission on  Form  8-K  
           dated March 12, 1998 with respect  to  the dismissal  of the 
           purported class action lawsuit  against ATSC, Ann Taylor, 
           certain officers and directors of  ATSC and  Ann Taylor, ML&Co. 
           and certain affiliates of  ML&Co.  Additionally  the Form 8-K 
           reported on  an  Amendment  to ATSC's  amended  and  restated  
           1992  Stock  Option   and Restricted Stock and Unit Award Plan.
        
  (c)      Exhibits
                   
           The  exhibits listed below are filed as a part of this Annual 
           Report.
          
Exhibit
Number
-------
  
  3.1    Certificate   of  Incorporation  of  the   Company,   as
          amended.  Incorporated by reference to Exhibit  3.3  to
          the Registration Statement of ATSC and Ann Taylor filed
          on May 3, 1989 (Registration No. 33-28522).
  
  3.2    By-Laws  of  the Company.  Incorporated by reference  to
          Exhibit  3.4 to the Registration Statement of ATSC  and
          Ann  Taylor filed on May 3, 1989 (Registration No.  33-
          28522).
  
  4.1    Indenture,  dated  as  of  June 15,  1993,  between  Ann
          Taylor and Fleet Bank, N.A., as Trustee, including  the
          form  of  Subordinated Note due 2000.  Incorporated  by
          reference to Exhibit 4.1 to the Current Report on  Form
          8-K of Ann Taylor filed on July 7, 1993.
  
  4.1.1  Instrument  of Resignation, Appointment and  Acceptance,
          dated  as of December 1, 1995, among Ann Taylor,  Fleet
          Bank,  N.A.,  as  Resigning Trustee, and  Norwest  Bank
          Minnesota,  N.A., the Successor Trustee.   Incorporated
          by  reference to Exhibit 4.1.1 to the Annual Report  on
          Form 10-K of the Company filed on April 8, 1996.
  
  10.1   Amended  and  Restated  Credit Agreement,  dated  as  of
          September  29, 1995, among Ann Taylor, Bank of  America
          National  Trust  and  Savings  Association  ("Bank   of
          America"), and Fleet Bank, National Association, as Co-
          Agents,  the financial institutions from time  to  time
          party  thereto, BA Securities, Inc., as  Arranger,  and
          Bank  of  America, as Agent.  Incorporated by reference
          to  Exhibit 10.1 to the Current Report on Form  8-K  of
          Ann Taylor filed on October 17, 1995.
  
  10.1.1 First   Amendment   to  Amended  and   Restated   Credit
          Agreement,  dated  as of January  4,  1996,  among  Ann
          Taylor,   Bank   of  America,  Fleet   Bank,   National
          Association,  as Co-Agents, the financial  institutions
          from  time to time party thereto, BA Securities,  Inc.,
          as   Arranger,   and   Bank  of  America,   as   Agent.
          Incorporated  by  reference to Exhibit  10.2.1  to  the
          Annual  Report on Form 10-K of ATSC filed on  April  8,
          1996.
  
===========================================================================
<PAGE 7>


 Exhibit 
 Number
 -------
  
10.1.2   Second  Amendment  to  the Amended and  Restated  Credit
          Agreement, dated as of April 9, 1996 among Ann  Taylor,
          Bank  of  America and Fleet Bank, National Association,
          as  Co-Agents, the financial institutions from time  to
          time party thereto, BA Securities Inc. as Arranger, and
          Bank of America as Agent.  Incorporated by reference to
          Exhibit 10.1 on Form 10-Q of ATSC for the Quarter ended
          August 3, 1996 filed on September 16, 1996.

10.2     Amended  and  Restated Guaranty, dated as  of  September
          29, 1995, made by ATSC in favor of Bank of America,  as
          Agent.   Incorporated by reference to Exhibit  10.4  to
          the  Current Report on Form 8-K of Ann Taylor filed  on
          October 17, 1995.

10.3     Amended  and  Restated  Security and  Pledge  Agreement,
          dated  as of September 29, 1995, made by Ann Taylor  in
          favor  of  Bank of America, as Agent.  Incorporated  by
          reference to Exhibit 10.2 to the Current Report on Form
          8-K of Ann Taylor filed on October 17, 1995.

10.4     Amended  and  Restated  Security and  Pledge  Agreement,
          dated  as of September 29, 1995, made by Ann Taylor  in
          favor  of  Bank of America, as Agent.  Incorporated  by
          reference to Exhibit 10.5 to the Current Report on Form
          8-K of Ann Taylor filed on October 17, 1995.

10.5     Trademark Security Agreement, dated as of September  29,
          1995,  made by Ann Taylor in favor of Bank of  America,
          as Agent.  Incorporated by reference to Exhibit 10.3 to
          the  Current Report on Form 8-K of Ann Taylor filed  on
          October 17, 1995.

10.6     1989  Stock  Option Plan.  Incorporated by reference  to
          Exhibit 10.18 to the Registration Statement of ATSC and
          Ann  Taylor filed on May 3, 1989 (Registration No.  33-
          28522).

10.6.1   Amendment  to  1989 Stock Option Plan.  Incorporated  by
          reference  to Exhibit 10.15.1 to the Annual  Report  on
          Form 10-K of ATSC filed on April 30, 1993.

10.7     Lease,  dated  as  of  March 17,  1989,  between  Carven
          Associates  and  Ann Taylor concerning  the  West  57th
          Street  headquarters.   Incorporated  by  reference  to
          Exhibit 10.21 to the Registration Statement of ATSC and
          Ann  Taylor filed on May 3, 1989 (Registration No.  33-
          28522).

10.7.1   First  Amendment  to  Lease, dated as  of  November  14,
          1990,   between  Carven  Associates  and  Ann   Taylor.
          Incorporated  by reference to Exhibit  10.17.1  to  the
          Registration Statement of ATSC filed on April 11,  1991
          (Registration No. 33-39905).

10.7.2   Second  Amendment  to Lease, dated as  of  February  28,
          1993,   between   Carven  Associates  and  Ann  Taylor.
          Incorporated  by reference to Exhibit  10.17.2  to  the
          Annual  Report on Form 10-K of ATSC filed on April  29,
          1993.

10.7.3   Extension and Amendment to Lease dated as of October  1,
          1993,   between  Carven  Associates  and  Ann   Taylor.
          Incorporated by reference to Exhibit 10.11 to the  Form
          10-Q  of  Ann Taylor for the Quarter ended October  30,
          1993 filed on November 26, 1993.

10.7.4   Modification of Amendment and Extension to Lease,  dated
          as  of April 14, 1994 between Carven Associates and Ann
          Taylor.   Incorporated by reference to Exhibit  10.15.4
          to  the  Annual  Report on Form 10-K of ATSC  filed  on
          April 28, 1995.

10.7.5   Fifth  Amendment to Lease, dated as of March  14,  1995,
          between Carven Associates and Ann Taylor.  Incorporated
          by reference to Exhibit 10.15.5 to the Annual Report on
          Form 10-K of ATSC filed on April 28, 1995.
  
=========================================================================
<PAGE 8>


 Exhibit 
 Number
 --------

10.7.6   Sixth  Amendment to Lease, dated as of January 5,  1996,
          between   Pacific  Metropolitan  Corporation  and   Ann
          Taylor.  Incorporated by reference to Exhibit 10.8.6 to
          the  Annual  Report  on  Form 10-K  of  ATSC  filed  on
          April 30, 1998.

10.7.7   Seventh  Amendment to Lease, dated as of June  5,  1996,
          between   Pacific  Metropolitan  Corporation  and   Ann
          Taylor.  Incorporated by reference to Exhibit 10.8.7 to
          the  Annual  Report  on  Form 10-K  of  ATSC  filed  on
          April 30, 1998.

10.7.8   Eighth  Amendment  to  Lease, undated,  between  Pacific
          Metropolitan  Corporation and Ann Taylor.  Incorporated
          by  reference to Exhibit 10.8.8 to the Annual Report on
          Form 10-K of ATSC filed on April 30, 1998.

10.7.9   Ninth  Amendment  to Lease, dated as of  May  13,  1997,
          between   Pacific  Metropolitan  Corporation  and   Ann
          Taylor.  Incorporated by reference to Exhibit 10.8.9 to
          the  Annual  Report  on  Form 10-K  of  ATSC  filed  on
          April 30, 1998.

10.7.10  Tenth  Amendment  to Lease, dated as of  May  21,  1997,
          between   Pacific  Metropolitan  Corporation  and   Ann
          Taylor.   Incorporated by reference to Exhibit  10.8.10
          to  the  Annual  Report on Form 10-K of ATSC  filed  on
          April 30, 1998.

10.8     Tax  Sharing  Agreement, dated  as  of  July  13,  1989,
          between ATSC and Ann Taylor.  Incorporated by reference
          to Exhibit 10.24 to Amendment No. 2 to the Registration
          Statement of ATSC and Ann Taylor filed on July 13, 1989
          (Registration No. 33-28522).

10.9     Employment  Agreement  dated  as  of  February  1,  1994
          between  ATSC and Sally Frame Kasaks.  Incorporated  by
          reference to Exhibit 10.8 to the Form 10-Q of ATSC  for
          the Quarter ended October 29, 1994 filed on December 9,
          1994.

10.10    Employment  Agreement dated February  16,  1996  between
          ATSC   and  J.  Patrick  Spainhour.   Incorporated   by
          reference to Exhibit 10.4 to the Annual Report on  Form
          10-K of ATSC filed on April 8, 1996.

10.10.1  Amendment to the Employment Agreement, dated August  23,
          1996,   between   ATSC   and  J.   Patrick   Spainhour.
          Incorporated  by reference to Exhibit  10.11.1  to  the
          Annual  Report  on Form 10-K of ATSC filed  on  May  1,
          1997.

10.11    Employment  Agreement dated November  25,  1996  between
          ATSC and Patricia DeRosa.  Incorporated by reference to
          Exhibit 10.3 to Form 10-Q of Ann Taylor for the Quarter
          ended November 2, 1996 filed on December 17, 1996.

10.12    Employment  Agreement dated September 20,  1996  between
          Ann  Taylor  and  Dwight  F.  Meyer.   Incorporated  by
          reference  to  Exhibit 10.4 to the  Form  10-Q  of  Ann
          Taylor for the Quarter ended November 2, 1996 filed  on
          December 17, 1996.

10.13    Separation Agreement dated January 24, 1997 between  Ann
          Taylor  and Paul E. Francis.  Incorporated by reference
          to  Exhibit 10.14 to the Annual Report on Form 10-K  of
          ATSC filed on May 1, 1997.

10.14    Separation  Agreement dated July 15,  1997  between  Ann
          Taylor and Barry Shapiro.  Incorporated by reference to
          Exhibit 10.16 to the Annual Report on Form 10-K of ATSC
          filed on April 30, 1998.

10.15    The  AnnTaylor Stores Corporation 1992 Stock Option  and
          Restricted  Stock  and  Unit Award  Plan,  Amended  and
          Restated  as  of  February 23, 1994 (the  "1992  Option
          Plan").  Incorporated by reference to Exhibit 10.15  to
          the Annual Report on Form 10-K of ATSC filed on May  1,
          1997.

=======================================================================
<PAGE 9>

Exhibit 
Number
--------

10.15.1  Amendment  to  the AnnTaylor Stores Corporation  Amended
          and Restated 1992 Stock Option and Restricted Stock and
          Unit  Award Plan, as approved by stockholders  on  June
          18, 1997.  Incorporated by reference to Exhibit 10.15.1
          to  the  Form 10-Q of ATSC for the Quarter Ended August
          2, 1997 filed on September 12, 1997.

10.15.2  Amendment  to  the AnnTaylor Stores Corporation  Amended
          and  Restricted 1992 Stock Option and Restricted  Stock
          and  Unit  Award  Plan dated as of  January  16,  1998.
          Incorporated by reference to Exhibit 10 on the  Current
          Report on Form 8-K of ATSC filed on March 12, 1998.

10.16    AnnTaylor   Stores  Corporation  Amended  and   Restated
          Management  Performance Compensation Plan, as  approved
          by  stockholders  on  June 18, 1997.   Incorporated  by
          reference to Exhibit 10.16 to the Form 10-Q of ATSC for
          the Quarter Ended August 2, 1997 filed on September 12,
          1997.

10.16.1  Amendment  to  the AnnTaylor Stores Corporation  Amended
          and  Restated Management Performance Compensation  Plan
          dated  as of March 12, 1998.  Incorporated by reference
          to  Exhibit 10.17.1 to the Annual Report of ATSC  filed
          on April 30, 1998.

10.17    Associate   Stock   Purchase  Plan.    Incorporated   by
          reference to Exhibit 10.31 to the Form 10-Q of ATSC for
          the  Quarter  Ended October 31, 1992 filed on  December
          15, 1992.

10.18    Amended  and  Restated  Receivables Financing  Agreement
          dated  October 31, 1995, among AnnTaylor Funding, Inc.,
          Ann  Taylor, Market Street Capital Corp. and PNC  Bank,
          National  Association.  Incorporated  by  reference  to
          Exhibit  10.31.4  to  the Form 10-Q  of  ATSC  for  the
          Quarter  ended  October 28, 1995 filed on  December  8,
          1995.

10.18.1  First  Amendment to the Amended and Restated Receivables
          Financing  Agreement,  dated as of  November  1,  1996,
          among  AnnTaylor  Funding,  Inc.,  Ann  Taylor,  Market
          Street   Capital   Corp.   and   PNC   Bank,   National
          Association.  Incorporated by reference to Exhibit 10.5
          to  the  Form 10-Q of Ann Taylor for the Quarter  ended
          November 2, 1996 filed on December 17, 1996.

10.19    Purchase  and  Sale Agreement dated as  of  January  27,
          1994  between  Ann Taylor and AnnTaylor  Funding,  Inc.
          Incorporated  by  reference to  Exhibit  10.29  to  the
          Annual  Report on Form 10-K of ATSC filed on March  31,
          1994.

10.20    AnnTaylor   Stores  Corporation  Deferred   Compensation
          Plan.   Incorporated by reference to Exhibit  10.33  to
          the  Annual Report on Form 10-K of ATSC filed on  April
          28, 1995.

10.20.1  Amendment  to the AnnTaylor Stores Corporation  Deferred
          Compensation Plan as approved by the Board of Directors
          on  August  11,  1995.  Incorporated  by  reference  to
          Exhibit  10.33.1  to  the Form 10-Q  of  ATSC  for  the
          Quarter  Ended  July 29, 1995 filed  on  September  11,
          1995.

10.21    Mortgage,  Assignment  of  Rents  and  Leases,  Security
          Agreement   and   Fixture  Financing  Statement   dated
          November   20,  1995,  between  AnnTaylor  Distribution
          Services,  Inc.,  as  Mortgagor, and  General  Electric
          Capital  Assurance Company, as Mortgagee.  Incorporated
          by  reference to Exhibit 10.34 to the Form 10-Q of  Ann
          Taylor for the Quarter ended October 28, 1995 filed  on
          December 8, 1995.

10.22    Promissory Note dated November 20, 1995 from Ann  Taylor
          and AnnTaylor Distribution Services, Inc., collectively
          as  Borrower,  to  General Electric  Capital  Assurance
          Company,  as  Lender.   Incorporated  by  reference  to
          Exhibit  10.35 to the Form 10-Q of Ann Taylor  for  the
          Quarter  ended  October 28, 1995 filed on  December  8,
          1995.
  
========================================================================
<PAGE 10>


 Exhibit 
 Number
 -------

10.23    Amended  and  Restated  Credit Agreement,  dated  as  of
          September  20, 1996, between AnnTaylor Global Sourcing,
          Inc.  and the Hongkong and Shanghai Banking Corporation
          Limited.  Incorporated by reference to Exhibit 10.6  to
          the  Form  10-Q  of  Ann Taylor for the  Quarter  ended
          November 2, 1996 filed on December 17, 1996.

10.23.1  Promissory  Note dated September 20, 1996 from AnnTaylor
          Global  Sourcing,  Inc.  to the Hongkong  and  Shanghai
          Banking   Corporation   Limited,   New   York   Branch.
          Incorporated by reference to Exhibit 10.7 to Form  10-Q
          of  Ann  Taylor for the Quarter ended November 2,  1996
          filed on December 17, 1996.

10.23.2  Amended  and  Restated Security Agreement, dated  as  of
          September  20, 1996, between AnnTaylor Global Sourcing,
          Inc.  and the Hongkong and Shanghai Banking Corporation
          Limited.  Incorporated by reference to Exhibit 10.8  to
          the  Form  10-Q  of  Ann Taylor for the  Quarter  ended
          November 2, 1996 filed on December 17, 1996.

10.23.3  Letter  of  Negative Pledge, dated as of  September  20,
          1996  from  AnnTaylor  Global  Sourcing,  Inc.  to  the
          Hongkong  and  Shanghai  Banking  Corporation  Limited.
          Incorporated by reference to Exhibit 10.9 to  the  Form
          10-Q  of  Ann Taylor for the Quarter ended November  2,
          1996 filed on December 17, 1996.

10.23.4  First  Amendment  to  the Amended  and  Restated  Credit
          Agreement,   dated  as  of  April  11,  1997,   between
          AnnTaylor  Global Sourcing, Inc. and the  Hongkong  and
          Shanghai Banking Corporation Limited.  Incorporated  by
          reference to Exhibit 10.25.4 to the Form 10-Q  of  ATSC
          for the Quarter Ended August 2, 1997 filed on September
          12, 1997.

10.23.5  Second  Amendment  to  the Amended and  Restated  Credit
          Agreement, dated as of July 29, 1997, between AnnTaylor
          Global  Sourcing,  Inc. and the Hongkong  and  Shanghai
          Banking Corporation Limited.  Incorporated by reference
          to  Exhibit  10.25.5 to the Form 10-Q of ATSC  for  the
          Quarter  Ended  August 2, 1997 filed on  September  12,
          1997.

10.23.6  Notification  of extension of termination  date  of  the
          Amended  and  Restated Credit Agreement,  dated  as  of
          September  20, 1996 between AnnTaylor Global  Sourcing,
          Inc.  and the HongKong and Shanghai Banking Corporation
          Limited.  Incorporated by reference to Exhibit  10.25.6
          to the Form 10-Q of ATSC for the Quarter Ended November
          1, 1997 filed on December 16, 1997.

10.24    Stock and Asset Purchase Agreement, dated as of June  7,
          1996,  by  and among ATSC, Ann Taylor, Cygne and  Cygne
          Group  (F.E.)  Limited.  Incorporated by  reference  to
          Exhibit 2 to the Registrants' Current Report on Form 8-
          K filed on June 10, 1996.

10.24.1  Amendment  to Stock and Asset Purchase Agreement,  dated
          as  of  August 27, 1996, by and among ATSC, Ann Taylor,
          Cygne and Cygne Group (F.E.) Limited.  Incorporated  by
          reference  to  Exhibit  3 to the  Registrants'  Current
          Report on Form 8-K filed on August 30, 1996.

10.24.2  Stockholders Agreement, dated as of September 20,  1996,
          among  ATSC,  Cygne and Cygne Group (F.E.)  Limited,  a
          Hong  Kong  corporation and wholly owned subsidiary  of
          Cygne.  Incorporated by reference to Exhibit 10.26.2 to
          the Annual Report on Form 10-K of ATSC filed on May  1,
          1997.

10.24.3  Consulting  Agreement, dated as of September  20,  1996,
          by  and  between ATSC, Cygne and Mr. Bernard M. Manuel.
          Incorporated  by reference to Exhibit  10.26.3  to  the
          Annual  Report  on Form 10-K of ATSC filed  on  May  1,
          1997.

10.24.4  Consulting  Agreement, dated as of September  20,  1996,
          by  and  between  ATSC, Cygne and  Mr.  Irving  Benson.
          Incorporated  by reference to Exhibit  10.26.4  to  the
          Annual  Report  on Form 10-K of ATSC filed  on  May  1,
          1997.

27       Financial Data Schedule.

=====================================================================
<PAGE 11>
  
                           SIGNATURES
          
          
          
          
          
     Pursuant to the requirements of Section 13 or 15(d)  of  the
Securities  Exchange Act of 1934, the Registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.
          
                                      ANNTAYLOR, INC.

                                      By: /s/ J. Patrick Spainhour
                                         -------------------------
                                              J. Patrick Spainhour
                                               Chairman and Chief
                                                Executive Officer
                                      
Date:  April 29, 1998
                                      
   Pursuant to the requirements of the Securities Exchange Act  of
1934,  this report has been signed below by the following  persons
on behalf of the Registrant and in the capacities and on the dates
indicated.

/s/ J. Patrick Spainhour       Chairman and Chief Executive    April 29, 1998
------------------------              Officer and Director
    J. Patrick Spainhour



/s/ Patricia DeRosa            President and Chief Operating  April 29, 1998
------------------------              Officer and Director
    Patricia DeRosa


/s/  Walter J. Parks           Senior Vice President -        April 29, 1998
------------------------              Chief Financial Officer
     Walter J. Parks                  and Treasurer


/s/ James M. Smith              Vice President and Controller   April 29, 1998
------------------------              Principal Accounting Officer
    James M. Smith


/s/ Gerald S. Armstrong         Director                        April 29, 1998
-----------------------
    Gerald S. Armstrong


/s/ James J. Burke, Jr.         Director                       April 29, 1998
------------------------
    James J. Burke, Jr


/s/ Robert C. Grayson           Director                      April 29, 1998
------------------------
    Robert C. Grayson


/s/ Rochelle B. Lazarus         Director                     April 29, 1998
-------------------------
    Rochelle B. Lazarus


/s/ Hanne M. Merriman           Director                     April 29, 1998
--------------------------
    Hanne M. Merriman


==============================================================================
<PAGE 12>


          
                         ANNTAYLOR, INC.
           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




                                                                   Page No.
                                                                   --------

Independent Auditors' Report.......................................    13

Consolidated Financial Statements:
    Consolidated Statements of Operations for the fiscal years
      ended January 31, 1998, February 1, 1997 and 
      February 3, 1996..............................................   14
    
    Consolidated Balance Sheets as of January 31, 1998 and
      February 1, 1997...............................................  15  
    
    Consolidated Statements of Cash Flows for the fiscal years
      ended January 31, 1998, February 1, 1997 and February 3, 1996...  16
    
    Notes to Consolidated Financial Statements........................  17


=============================================================================
<PAGE 13>

                  INDEPENDENT AUDITORS' REPORT





To the Stockholder of
  ANNTAYLOR, INC.:

     
     We  have  audited  the  accompanying consolidated  financial
statements of AnnTaylor, Inc. and its subsidiaries, listed in the
accompanying   index.   These  financial   statements   are   the
responsibility  of the Company's management.  Our  responsibility
is  to express an opinion on these financial statements based  on
our audits.
     
     We   conducted  our  audits  in  accordance  with  generally
accepted  auditing standards.  Those standards  require  that  we
plan  and perform the audit to obtain reasonable assurance  about
whether   the   financial  statements  are   free   of   material
misstatement.   An  audit includes examining, on  a  test  basis,
evidence  supporting the amounts and disclosures in the financial
statements.   An  audit  also includes assessing  the  accounting
principles used and significant estimates made by management,  as
well  as evaluating the overall financial statement presentation.
We  believe  that our audits provide a reasonable basis  for  our
opinion.
     
     In  our  opinion,  such  consolidated  financial  statements
present  fairly, in all material respects, the financial position
of  the  Company  and its subsidiaries at January  31,  1998  and
February  1, 1997, and the results of their operations and  their
cash flows for each of the three fiscal years in the period ended
January 31, 1998 in conformity with generally accepted accounting
principles.




DELOITTE & TOUCHE LLP


New York, New York
March 19, 1998

=========================================================================
<PAGE 14>

                         ANNTAYLOR, INC.
              CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Years Ended January 31, 1998, February 1, 1997 and
                        February 3, 1996






                                                 Fiscal Years Ended
                                         -----------------------------------
                                         January 31, February 1,  February 3,
                                            1998        1997         1996
                                         ----------  ----------    ---------
                                                    (in thousands)

Net sales...............................   $781,028    $798,117    $731,142
Cost of sales...........................    411,756     443,443     425,225
                                            -------     -------     -------
Gross profit............................    369,272     354,674     305,917
Selling, general and administrative   
  expenses..............................    308,232     291,027     271,136
Studio shoe stores closing expense......        ---       3,600         ---
Employment contract separation expense..        ---       3,500         ---
Amortization of goodwill................     11,040      10,086       9,506
                                            -------     -------     -------
Operating income........................     50,000      46,461      25,275
Interest expense........................     19,989      24,416      20,956
Other expense, net......................        548         403          38
                                            -------     -------     -------
Income  before  income  taxes and  
  extraordinary  loss...................     29,463      21,642       4,281
Income tax provision....................     17,466      12,975       5,157
                                            -------     -------     -------
Income (loss) before extraordinary loss.     11,997       8,667        (876)
Extraordinary loss (net of income 
  tax benefit of $130,000)..............        173         ---        ---
                                            -------     -------     -------
   Net income (loss)....................   $ 11,824    $  8,667    $   (876)
                                            =======     =======     =======



            See accompanying notes to consolidated financial statements.

==============================================================================
<PAGE 15>


                         ANNTAYLOR, INC.
                   CONSOLIDATED BALANCE SHEETS
              January 31, 1998 and February 1, 1997



                                                    January 31, February 1,
                                                         1998      1997
                                                    ----------- ----------
                      ASSETS                              (in thousands)
Current assets
 Cash and cash equivalents...........................  $ 31,369   $  7,025
 Accounts receivable, net............................    60,211     63,605
 Merchandise inventories.............................    97,234    100,237
 Prepaid expenses and other current assets...........    21,291     25,653
                                                        -------    -------
     Total current assets............................   210,105    196,520
Property and equipment, net..........................   139,610    143,433
Goodwill, net........................................   330,739    341,779
Deferred financing costs, net........................     1,258      2,743
Other assets.........................................     1,949      3,664
                                                        -------    -------
     Total assets....................................  $683,661   $688,139
                                                        =======    =======
       LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
 Accounts payable....................................  $ 38,185   $ 34,341
 Accrued tenancy.....................................     6,727      6,827
 Gift certificates redeemable........................     5,935      4,903
 Accrued expenses....................................    35,958     31,312
 Current portion of long-term debt...................     1,119        287
                                                        -------    -------
     Total current liabilities.......................    87,924     77,670
Long-term debt.......................................   105,157    130,905
Deferred income taxes................................       ---      4,872
Other liabilities....................................    10,082      7,952
Commitments and contingencies
Stockholder's equity
 Common stock, $1.00 par value; 1,000 
   shares authorized; 1 share issued 
   and outstanding...................................         1          1
 Additional paid-in capital..........................   445,886    443,952
 Retained earnings...................................    34,611     22,787
                                                        -------    -------
     Total stockholder's equity......................   480,498    466,740
                                                        -------    -------
     Total liabilities and stockholder's equity......  $683,661   $688,139
                                                        =======    =======
                                
                                
  See accompanying notes to consolidated financial statements.

============================================================================
<PAGE 16>

                         ANNTAYLOR, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended January 31, 1998, February 1, 1997 and
                        February 3, 1996
                                
                                                   Fiscal Years Ended
                                            ---------------------------------
                                            Jan. 31,     Feb. 1,      Feb. 3,
                                              1998        1997         1996
                                            --------    --------     --------
                                                     
                                                     (in thousands)
Operating activities:
  Net income (loss).....................  $  11,824   $   8,667    $    (876)
  Adjustments to reconcile 
    net income (loss) to net cash
    provided by operating activities:
      Extraordinary loss................        303         ---          ---
      Equity earnings in CAT............        ---      (1,402)      (1,646)
      Provision  for loss on 
        accounts receivable.............      1,795       1,803        1,280
      Depreciation and amortization.....     27,803      26,208       18,788
      Amortization of goodwill..........     11,040      10,086        9,506
      Amortization of deferred 
        compensation....................      1,065         191           68
      Non-cash interest.................      1,419       1,574        1,004
      Deferred income taxes.............     (2,687)       (985)       3,150
      Loss  on disposal of property 
        and equipment...................        248       3,209        1,143
      Change in assets and liabilities 
        net of effects from
        purchase of AnnTaylor 
        Global Sourcing:
              Decrease  (increase)  
                in  receivables.........      1,599       4,987      (10,464)
             Decrease (increase) in 
               merchandise inventories..      3,003       9,342       (8,980)
            Decrease (increase) in 
               prepaid expenses and
               other current assets.....      1,894         247      (12,951)
            Decrease in other 
              non-current assets 
              and liabilities, net......      2,861         738          429
          Increase in accounts 
            payable and accrued 
            liabilities.................      9,422       2,867        6,925
                                            -------     -------      -------
  Net cash provided by operating 
    activities..........................     71,589      67,532        7,376
                                            =======     =======      =======
Investing activities:
  Purchases of property and equipment...    (22,945)    (16,107)     (78,378)
  Purchase of AnnTaylor Global Sourcing         ---        (227)         ---
                                            -------     -------      -------
  Net cash used by investing 
    activities..........................    (22,945)    (16,334)     (78,378)
                                            -------     -------      -------
Financing activities:
  Borrowings (repayments) under 
    revolving  credit  facility.........        ---    (101,000)      37,000
  Parent company contribution...........        869      96,194          384
  Proceeds from (repayment of) term loan    (24,500)        ---       24,500
  Term loan prepayment penalty..........       (184)        ---          ---
  Proceeds from (payments of) mortgage..       (416)       (266)       6,958
  Borrowings (repayments) under  
    receivables  facility...............        ---     (40,000)       4,000
  Payment of financing costs............        (69)       (384)      (2,108)
                                            -------     -------      -------
  Net cash provided by (used by) 
    financing activities................    (24,300)    (45,456)      70,734
                                             ------     -------      -------
Net increase (decrease) in cash.........     24,344       5,742         (268)
Cash, beginning of year.................      7,025       1,283        1,551
                                             ------     -------      -------
Cash, end of year.......................  $  31,369   $   7,025    $   1,283
                                           ========    ========     ========
Supplemental Disclosures of 
  Cash Flow Information:
  Cash paid during the year 
    for interest........................  $ 19,251    $  22,689    $  19,607
                                           =======     ========     ========
  Cash paid during the  
    year for income taxes...............  $ 17,220    $   8,990    $   6,886
                                           =======     ========     ========
  
  
                                
  See accompanying notes to consolidated financial statements.
=========================================================================
<PAGE 17>                       

                         ANNTAYLOR, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                
                                
                                
                                
1.   Summary of Significant Accounting Policies
------------------------------------------------
     
     AnnTaylor, Inc. (the "Company" or "Ann Taylor") is a leading
national  specialty retailer of better quality  women's  apparel,
shoes and accessories sold principally under the Ann Taylor brand
name.
     
     All  of  the  outstanding  capital  stock  of  the  Company,
consisting  of one share of common stock, is owned  by  AnnTaylor
Stores Corporation ("ATSC").


Basis of Presentation
---------------------
     
     The  consolidated financial statements include the  accounts
of  the  Company and its subsidiaries.  All intercompany accounts
have been eliminated in consolidation.
     
     Certain  Fiscal 1996 and 1995 amounts have been reclassified
to conform to the Fiscal 1997 presentation.


Fiscal Year
-----------
     
     The  Company follows the standard fiscal year of the  retail
industry, which is a 52 or 53 week period ending on the  Saturday
closest to January 31 of the following calendar year.  The fiscal
year  ended February 3, 1996 included 53 weeks.  The other fiscal
years presented included 52 weeks.
     
     
Finance Service Charge Income
-----------------------------
     
     Income  from  finance service charges relating  to  customer
receivables,  which  is  deducted  from  selling,   general   and
administrative expenses, amounted to $8,568,000 for Fiscal  1997,
$9,024,000 for Fiscal 1996 and $8,328,000 for Fiscal 1995.


Merchandise Inventories
-----------------------
     
     Merchandise  inventories are accounted  for  by  the  retail
inventory  method and are stated at the lower of cost  (first-in,
first-out  method)  or  market.  The majority  of  the  Company's
inventory represents finished goods available for sale.


Property and Equipment
-----------------------
     
     Property  and equipment are recorded at cost.   The  Company
capitalized interest costs of approximately $1,300,000 in  Fiscal
1995.   Depreciation and amortization are computed on a straight-
line basis over the estimated useful lives of the assets (3 to 40
years) or, in the case of leasehold improvements, over the  lives
of the respective leases, if shorter.
     
======================================================================
<PAGE 18>

                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



1.   Summary of Significant Accounting Policies (Continued)
-------------------------------------------------------------


Deferred Financing Costs
------------------------
     
     Deferred  financing  costs  are being  amortized  using  the
interest  method over the term of the related debt.   Accumulated
amortization  at  January  31, 1998  and  February  1,  1997  was
$4,427,000 and $3,534,000, respectively.


Goodwill
--------
     
     Goodwill  relating to the 1989 acquisition of Ann Taylor  by
ATSC  is being amortized on a straight-line basis over 40  years.
Goodwill relating to the 1996 Sourcing Acquisition (see  Note  9)
is  being  amortized  on a straight-line  basis  over  25  years.
Accumulated amortization at January 31, 1998 and February 1, 1997
was  $87,851,000  and $76,811,000, respectively.   On  an  annual
basis, the Company compares the carrying value of its goodwill to
an   estimate  of  the  Company's  fair  value  to  evaluate  the
reasonableness  of the carrying value and remaining  amortization
period.  Fair value is computed using projections of future  cash
flows.
     
     
Income Taxes
------------

     The  Company  accounts for income taxes in  accordance  with
Statement  of Financial Accounting Standards No. 109, "Accounting
for  Income Taxes", which requires an asset and liability  method
of  accounting  for deferred income taxes.  Under the  asset  and
liability  method,  deferred  tax  assets  and  liabilities   are
recognized, and income or expense is recorded, for the  estimated
future  tax consequences attributable to differences between  the
financial  statement  carrying amounts  of  existing  assets  and
liabilities and their respective tax bases.
     
     Pursuant  to  a Tax Sharing Agreement, ATSC and the  Company
have agreed to elect to file consolidated income tax returns  for
federal income tax purposes and may elect to file such returns in
states  and  other  relevant jurisdictions that  permit  such  an
election,  for  income  tax  purposes.   With  respect  to   such
consolidated  income  tax  returns,  the  Tax  Sharing  Agreement
generally  requires  the Company to pay to ATSC  the  entire  tax
shown  to be due on such consolidated returns, provided that  the
amount  paid by the Company shall not exceed the amount of  taxes
that would have been owed by the Company on a stand-alone basis.


Use of Estimates
------------------
     
     The  preparation of financial statements in conformity  with
generally  accepted accounting principles requires management  to
make estimates and assumptions that affect the reported amount of
assets  and liabilities and disclosures of contingent assets  and
liabilities  at  the  date of the financial  statements  and  the
reported  amounts  of  revenue and expenses during  the  reported
period.  Actual results could differ from these estimates.
     
=======================================================================
<PAGE 19>
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




1.   Summary of Significant Accounting Policies (Continued)
-------------------------------------------------------------

Recent Accounting Pronouncements
----------------------------------

     In  June  1997,  the  Financial Accounting  Standards  Board
issued  Statement  of  Financial Accounting  Standards  No.  130,
"Reporting  Comprehensive Income", which requires that components
of comprehensive income be shown in a financial statement that is
displayed with the same prominence as other financial statements;
and   Statement  of  Financial  Accounting  Standards  No.   131,
"Disclosure   About  Segments  of  an  Enterprise   and   Related
Information",  which  establishes annual  and  interim  reporting
standards  for  an  enterprise's operating segments  and  related
disclosures about its products, services, major customers and the
material  countries in which the entity holds assets and  reports
revenues.   In February 1998, the Financial Accounting  Standards
Board issued Statement of Financial Accounting Standards No. 132,
"Employers'  Disclosure about Pensions and  Other  Postretirement
Benefits",  which revises disclosures, but does  not  change  the
measurement  or  recognition  of  these  plans.   Management   is
currently  evaluating the impact of these standards and  believes
their   adoption  will  not  impact  the  Company's  consolidated
financial position, results of operations or cash flows, and  any
impact   will  be  limited  to  the  form  and  content  of   its
disclosures.   All of these statements are effective  for  fiscal
years beginning after December 15, 1997.


2.   Long-Term Debt
-------------------
     
     The following table summarizes long-term debt outstanding at
January 31, 1998 and February 1, 1997:
                                   
                                   January 31, 1998       February 1, 1997
                                  --------------------   -------------------
                                  Carrying   Estimated   Carrying  Estimated
                                   Amount   Fair Value    Amount  Fair Value
                                  --------  ----------   -------- ----------
                                               
                                                (in thousands)
Senior Debt:
 Term loan......................  $    ---  $     ---    $ 24,500   $ 24,500
 Mortgage.......................     6,276      6,276       6,692      6,692
8-3/4% Notes....................   100,000    100,500     100,000     97,750
                                   -------    -------     -------    -------
        Total  debt.............   106,276    106,776     131,192    128,942
Less current portion............     1,119      1,119         287        287
                                   -------    -------     -------    -------
        Total  long-term debt...  $105,157   $105,657    $130,905   $128,655
                                   =======    =======     =======    =======
     
     
     In   accordance  with  the  requirements  of  Statement   of
Financial  Accounting Standards No. 107, "Disclosures about  Fair
Value  of  Financial  Instruments", the  Company  determined  the
estimated  fair value of its financial instruments  using  quoted
market  information, as available.  As judgment is involved,  the
estimates  are  not  necessarily indicative of  the  amounts  the
Company could realize in a current market exchange.

=======================================================================
<PAGE 20>
     
     
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



2.   Long-Term Debt (Continued)
--------------------------------

     Ann  Taylor's  Bank  Credit Agreement  originally  provided,
among   other  things,  for  a  $25,000,000  term  loan   and   a
$125,000,000 revolving credit facility.  As described  below,  in
January 1996, the Company prepaid a portion of the term loan  and
reduced  the revolving credit facility to $122,000,000.  On  July
2,  1997,  the Company used available cash to prepay $24,500,000,
the  outstanding balance of the term loan.  The maturity date  of
the  revolving  credit facility is July 29,  1998;  however,  the
Company is required to reduce the outstanding loan balance  under
the  revolving credit facility to $50,000,000 or less for  thirty
consecutive  days  during Fiscal 1996 and  in  each  fiscal  year
thereafter.   The maximum amount that may be borrowed  under  the
revolving  credit facility is reduced by the amount of commercial
and  standby letters of credit outstanding under the Bank  Credit
Agreement.  At January 31, 1998 and February 1, 1997, Ann  Taylor
had  outstanding commercial and standby letters of  credit  under
the   Bank  Credit  Agreement  of  $33,000,000  and  $12,000,000,
respectively.  At January 31, 1998 the amount available under the
revolving credit facility was $89,000,000.
     
     The  amounts outstanding under the revolving credit facility
bear  interest at a rate equal to, at the Company's  option,  the
Bank of America (1) Base Rate, or (2) Eurodollar Rate plus 0.75%.
In  addition,  Ann  Taylor  is required  to  pay  the  lenders  a
quarterly  commitment  fee  of 0.25%  per  annum  of  the  unused
revolving loan commitment.
     
     Under  the  terms  of  the Bank Credit  Agreement,  Bank  of
America  obtained  a  pledge of Ann Taylor's  outstanding  common
stock  held by ATSC and a security interest in certain assets  of
Ann  Taylor,  excluding  inventory and accounts  receivable.   In
addition, the Bank Credit Agreement contains financial and  other
covenants,  including  limitations  on  indebtedness,  liens  and
investments, restrictions on dividends or other distributions  to
stockholders,  and  requirements to  maintain  certain  financial
ratios  and  specified  levels of net  worth.   The  Bank  Credit
Agreement  also  provides  for, among  other  things,  an  annual
limitation on capital expenditures of $32,500,000 in Fiscal  1997
and  beyond,  subject  to  increase  if  certain  conditions  are
satisfied.
     
     Ann  Taylor  sells  its  proprietary  credit  card  accounts
receivable  to AnnTaylor Funding, Inc., a wholly owned subsidiary
of the Company, that uses the receivables to secure borrowings of
up  to  $40,000,000,  based on its eligible accounts  receivable,
under   a   receivables  financing  facility  (the   "Receivables
Facility").   As  of January 31, 1998, there were  no  borrowings
outstanding  under the Receivables Facility.  AnnTaylor  Funding,
Inc. had total assets of approximately $50,440,000 at January 31,
1998,  all of which are subject to the security interest  of  the
lender  under the Receivables Facility.  The Receivables Facility
matures in May 1998.
     
     In  connection  with the Sourcing Acquisition  discussed  in
Note  9,  the  Hongkong and Shanghai Banking Corporation  entered
into  an  Amended  and Restated Credit Agreement  with  AnnTaylor
Global  Sourcing, Inc. ("ATGS", formerly known  as  CAT  US  Inc.
("CAT")  and  now  a  wholly  owned subsidiary  of  Ann  Taylor),
continuing the $40,000,000 credit facility of ATGS's predecessor.
On  July  29,  1997,  ATGS amended its credit facility  with  the
HKSBC,  increasing the commitment available to $50,000,000.   The
facility is available principally for the issuance of letters  of
credit;  cash  borrowings under the facility  are  limited  to  a
maximum of $5,000,000.  Such credit facility matures on July  29,
1998  and contains financial and other covenants.  As of  January
31, 1998 and February 1, 1997, commercial and standby letters  of
credit  outstanding under this facility totaled  $25,102,000  and
$28,189,000,   respectively,  and  there   were   no   borrowings
outstanding under this facility.

==================================================================
<PAGE 21>
                                
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     
     
2.   Long-Term Debt (Continued)
--------------------------------
     
     As   noted  above,  the  Company's  Bank  Credit  Agreement,
Receivables Facility and HKSBC Agreement mature in May  and  July
1998.   The  Company  is  currently  negotiating  to  obtain  new
financing  and anticipates new arrangements will be in  place  in
the second quarter of Fiscal 1998.
     
     On  June  28, 1993, Ann Taylor issued $110,000,000 principal
amount of its 8-3/4% Subordinated Notes due 2000 ("8-3/4% Notes").  The
outstanding  principal amount of these notes as  of  January  31,
1998 was $100,000,000.
     
     In  July  1993,  Ann  Taylor  entered  into  a  $110,000,000
(notional  amount) interest rate swap agreement,  which  had  the
effect  of converting the Company's interest obligations  on  the
8-3/4%  Notes to a variable rate.  Under the agreement, the  Company
received a fixed rate of 4.75% and paid a floating rate based  on
LIBOR,  as determined in six month intervals.  The swap agreement
matured  in  July  1996.   Net receipts  or  payments  under  the
agreement were recognized as adjustments to interest expense.
     
     The  Company  and  its  wholly  owned  subsidiary  AnnTaylor
Distribution  Services, Inc. are parties to a  $7,000,000  seven-
year  mortgage loan secured by the Company's distribution  center
land  and  building in Louisville, Kentucky.  The  mortgage  loan
bears interest at 7.5% and is payable in monthly installments  of
approximately $130,000.  Pursuant to the requirements of the Bank
Credit  Agreement, in January 1996, the Company applied  one-half
of  the  proceeds of the mortgage to reduce the amount  available
under  the  revolving  credit  facility,  thereby  reducing   the
revolving credit facility by $3,000,000, and prepaid a portion of
the term loan.
     
     The   aggregate   principal  payments   of   all   long-term
obligations are as follows:
   
      Fiscal Year                            (in thousands)
      ----------
        1998...................................  $  1,119
        1999...................................     1,206
        2000...................................   101,300
        2001...................................     1,401
        2002...................................     1,250
                                                  -------
           Total...............................  $106,276
                                                  =======
     
     
3.   Preferred Securities
-------------------------
     
     In  April and May of Fiscal 1996, ATSC completed the sale of
an aggregate of $100,625,000 of 8-1/2% Company-Obligated Mandatorily
Redeemable   Convertible  Preferred  Securities  (the  "preferred
securities")  issued by its financing vehicle, AnnTaylor  Finance
Trust,  a  Delaware business trust (the "Trust").  The  preferred
securities  have  a liquidation preference of  $50  per  security
($100,625,000 in the aggregate) and are convertible at the option
of  the  holders thereof into ATSC's common stock at a conversion
rate  of 2.545 shares of common stock for each preferred security
(equivalent   to  $19.65  per  share  of  common   stock,   which
represented  a 20% premium to the $16.375 closing  price  of  the
common  stock on the New York Stock Exchange at the date  of  the
execution of the purchase agreement relating to the sale of the

====================================================================
<PAGE 22>
                                
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     
3.   Preferred Securities (Continued)
-------------------------------------
     
preferred securities.  The sole assets of  the  Trust  are 
$103,700,000 of 8-1/2% Convertible  Subordinated Debentures  
of  ATSC  maturing on April 15,  2016.   A  total  of
2,012,500  preferred securities were issued, and are  convertible
into  an  aggregate of 5,121,812 shares of ATSC's  common  stock.
ATSC received net proceeds of $95,984,000 in connection with  the
sale  of  the  preferred  securities, of  which  $94,000,000  was
applied  to  reduce  outstanding borrowings under  the  Company's
revolving credit facility.
     
     
4.   Allowance for Doubtful Accounts
------------------------------------
     
     A summary of activity in the allowance for doubtful accounts
for the fiscal years ended January 31, 1998, February 1, 1997 and
February 3, 1996 is as follows:
     
                                                   Fiscal Years Ended
                                              -----------------------------
                                              Jan. 31,  Feb.  1,    Feb. 3,
                                                1998      1997       1996
                                              --------  --------    -------
                                                     
                                                     (in thousands)

     Balance at beginning of year..........  $   811    $   736    $   931
     Provision for loss on 
       accounts receivable.................    1,795      1,803      1,280
     Accounts written off..................   (1,794)    (1,728)    (1,475)
                                              ------     ------     ------
     Balance at end of year................  $   812    $   811    $   736
                                              ======     ======     ======


5.   Commitments and Contingencies
----------------------------------

Rental Commitments
------------------
     
     Ann  Taylor  occupies its retail stores  and  administrative
facilities  under  operating  leases,  most  of  which  are  non-
cancelable.   Some  leases contain renewal  options  for  periods
ranging from one to ten years under substantially the same  terms
and  conditions as the original leases.  Most of the store leases
require  Ann  Taylor  to pay a specified  minimum  rent,  plus  a
contingent rent based on a percentage of the store's net sales in
excess of a specified threshold.  In addition, most of the leases
require  Ann  Taylor  to  pay real estate  taxes,  insurance  and
certain  common  area and maintenance costs in  addition  to  the
future minimum lease payments shown below.
     
     Future minimum lease payments under non-cancelable operating
leases at January 31, 1998 are as follows:
     
     Fiscal Year                         (in thousands)
      
      1998.................................  $68,663
      1999.................................   67,537
      2000.................................   65,491
      2001.................................   62,446
      2002.................................   59,515
      2003 and thereafter..................  251,998
                                             -------
           Total........................... $575,650
                                             =======

==========================================================================
<PAGE 23>
                                
                                
                                
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     
5.   Commitments and Contingencies (continued)
----------------------------------------------

     Rent  expense for the fiscal years ended January  31,  1998,
February 1, 1997 and February 3, 1996 was as follows:

                                      Fiscal Years Ended
                                 ----------------------------
                                 Jan. 31,    Feb. 1,   Feb. 3,
                                   1998        1997      1996
                                 -------     -------   -------
                                         (in thousands)
     Minimum rent................ $59,495    $55,571   $47,132
     Percentage rent.............   1,671      2,433     3,090
                                   ------     ------    ------
          Total.................. $61,166    $58,004   $50,222
                                   ======     ======    ======

Litigation
----------
     
     The  Company has been named as a defendant in several  legal
actions  arising  from its normal business activities.   Although
the  amount  of  any liability that could arise with  respect  to
these  actions cannot be accurately predicted, in the opinion  of
the  Company, any such liability will not have a material adverse
effect  on  the  financial  position, results  of  operations  or
liquidity of the Company.
     
     In   addition,  ATSC,  Ann  Taylor,  certain  officers   and
directors  of ATSC and Ann Taylor, Merrill Lynch & Co. ("ML&Co.")
and certain affiliates of ML&Co. have been named as defendants in
a  purported  class  action  lawsuit  filed  by  certain  alleged
stockholders alleging that ATSC and the other defendants  engaged
in  a  fraudulent scheme and course of business that  operated  a
fraud  or deceit on purchasers of ATSC's common stock.  On  March
10,  1998,  the Court issued an Opinion dismissing the complaint.
The Court's Opinion granted the plaintiffs leave to amend and re-
file the complaint within thirty days of the date of the Opinion,
and an amended complaint was filed by the plaintiffs on April  9,
1998.  The Company believes that the amended complaint is without
merit  and intends to defend the action vigorously.  As the  case
is  in preliminary stages, any liability that may arise from this
action cannot be predicted at this time.
     
Other
-----
     
     The Internal Revenue Service (the "IRS") examination of ATSC
has  recently  been concluded.  The IRS has made  an  assessment,
which  ATSC  has  paid, that is not material  to  ATSC's  or  the
Company's consolidated financial condition, operating results  or
liquidity.   All  matters in the IRS examination are  subject  to
final review by the Congressional Joint Committee on Taxation.
     
     
6.  Property and Equipment
--------------------------

     Property and equipment consists of the following:
                                             
                                             Fiscal Years Ended
                                            ---------------------
                                            Jan. 31,      Feb. 1,
                                              1998         1997
                                            --------      -------
                                               (in thousands)

        Land and building.................  $  8,625     $  8,603
        Leasehold improvements............    85,332       76,576
        Furniture and fixtures............   136,314      120,595
        Construction in progress..........     6,422        3,307
                                             -------      -------
                                             236,693      209,081
        
        Less accumulated depreciation 
          and amortization................    97,083       65,648
                                             -------      -------
            Net property and equipment....  $139,610     $143,433
                                             =======      =======
            
                              
===========================================================================
<PAGE 24>
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     
     
7. Extraordinary Item
---------------------
     
     On  July 2, 1997, the Company used available cash to  prepay
$24,500,000,  the  outstanding  balance  of  its  term  loan  due
September  1998,  which  resulted in an extraordinary  charge  to
earnings in Fiscal 1997 of $173,000, net of income tax benefit.
     
8. Nonrecurring Charges
-----------------------

Studio Shoe Stores Closing
--------------------------
     
     In  connection  with  the planned  closing  of  all  of  the
Company's  Ann  Taylor Studio shoe stores, announced  in  January
1997,  the  Company recorded a pre-tax charge of $3,600,000.   Of
the  total impairment loss, $2,500,000 represented impairment  of
long-lived  assets  such  as properties and  store  fixtures  and
$1,100,000 pertained to lease and other related costs  for  these
locations until the properties are sublet.

Resignation of the Chairman and Chief Executive Officer
-------------------------------------------------------
     
     Effective  August  23,  1996, the then  Chairman  and  Chief
Executive  Officer and Director of ATSC and Ann Taylor  resigned.
In connection with this resignation, a one-time pre-tax charge of
$3,500,000  was recorded relating to the estimated costs  of  the
Company's  obligations  under  the former  Chairman's  employment
contract with ATSC.
     
     
9. Certain Relationships and Related Transactions
---------------------------------------------------
  
Transactions with Merrill Lynch and its Affiliates
--------------------------------------------------
     
     At  January  31,  1998, certain affiliates  of  ML&Co.  held
approximately 24.0% of ATSC's outstanding common stock.   Two  of
the  members  of the Board of Directors of the Company  and  ATSC
serve  as  representatives of ML&Co. and its  affiliates.   As  a
result, ML&Co. and such affiliates are in a position to influence
the management of the Company and ATSC.
     
     In Fiscal 1996, ATSC paid approximately $1,207,500 to ML&Co.
and Merrill Lynch, Pierce, Fenner & Smith, Incorporated ("Merrill
Lynch") in connection with their services as placement agents for
the  sale of the preferred securities (see Note 3).  ATSC  agreed
to  indemnify  ML&Co.  and Merrill Lynch,  as  placement  agents,
against certain liabilities, including certain liabilities  under
the  federal securities law, in connection with the sale  of  the
preferred securities.
     
     
Sourcing Acquisition
--------------------
     
     In  Fiscal 1995, the Company purchased approximately 16%  of
its  merchandise directly from Cygne Designs, Inc. ("Cygne")  and
an additional 38% of its merchandise through the Company's direct
sourcing joint venture with Cygne known as CAT.  On September 20,
1996  (the  "Effective Date"), pursuant to the  Stock  and  Asset
Purchase  Agreement dated as of June 7, 1996, by and among  ATSC,
Ann  Taylor, Cygne and Cygne Group F.E. Limited (as amended,  the
"Purchase Agreement"), Ann Taylor acquired the entire interest

======================================================================
<PAGE 25>

                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     
9. Certain Relationships and Related Transactions (Continued)
-------------------------------------------------------------
     
of Cygne in CAT and certain  of  the  assets  (the "Assets") 
of the Ann Taylor Woven  Division  of  Cygne  (the  "Division") 
that were used for sourcing  merchandise for  Ann Taylor 
(the "Sourcing Acquisition").  As a result of the Sourcing  
Acquisition,  CAT  became  an  indirect  wholly   owned
subsidiary  of the Company and now performs all of the  Company's
direct sourcing functions, including those previously provided by
the Division, under the name AnnTaylor Global Sourcing, Inc.  For
financial  reporting purposes, the transaction has been accounted
for  as  of  the  Effective Date under  the  purchase  method  of
accounting in accordance with Accounting Principles Board Opinion
No. 16, "Accounting for Business Combinations".
     
     In consideration for Cygne's interest in CAT and the Assets,
ATSC and the Company paid (i) 2,348,145 shares of common stock of
ATSC  having  an  aggregate value, as of the Effective  Date,  of
$36,000,000, (ii) $3,200,000 in cash as payment for inventory and
fixed  assets  and  (iii) approximately  $6,500,000  in  cash  in
settlement  of open accounts payable by Ann Taylor to  Cygne  for
merchandise delivered by Cygne prior to the closing.  The Company
also assumed certain liabilities related to the operations of the
Division.    The  purchase  price  was  subject  to  post-closing
adjustments  based  upon  final determination  of  the  value  of
certain of the assets purchased and liabilities assumed.   As  of
February  1,  1997, certain post-closing adjustments reduced  the
net  cash  paid  to approximately $227,000.  The  total  purchase
price  to  the  Company  of  the Sourcing  Acquisition  has  been
allocated  to the tangible and intangible assets and  liabilities
of CAT and the Division that were acquired, based on estimates of
their  respective fair values.  The excess of the purchase  price
over  the  fair value of the net assets acquired was recorded  as
goodwill and is being amortized on a straight-line basis over  25
years.
     
     The  following unaudited proforma consolidated data for  the
Company  for  the  fiscal year ended February 1,  1997  has  been
presented  to  reflect  the Sourcing Acquisition  as  if  it  had
occurred at the beginning of such period:
                                          Fiscal Year Ended
                                          February 1, 1997
                                          ------------------
                                          Actual    Proforma
                                            (in thousands)

   Net sales............................  $798,117  $798,117
   Net income...........................  $  8,667  $ 11,595
     
     
     The  proforma  data set forth above does not purport  to  be
indicative  of the results that actually would have  occurred  if
the  Sourcing  Acquisition had occurred at the beginning  of  the
period presented or of results which may occur in the future.
     
     A  summary  of  the noncash activity that  occurred  in  the
fiscal  year  ended  February 1, 1997  in  conjunction  with  the
Sourcing Acquisition is as follows:
     
                                                (in thousands)

   Fair value of assets acquired................  $  4,727
   Excess  of  purchase price over 
     the fair value of  net  assets
     acquired...................................    38,340
   Ann Taylor's previous investment in CAT......    (6,840)
   Issuance of ATSC's common stock..............   (36,000)
                                                   -------
   Cash paid....................................  $    227
                                                   =======

=======================================================================
<PAGE 26>
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
10. Stock Option Plans
----------------------
     
     ATSC   accounts   for  stock  options  in  accordance   with
Accounting  Principles  Board Opinion  No.  25,  under  which  no
compensation costs have been recognized for stock option  awards.
Had  compensation costs of option awards been determined under  a
fair value alternative method as stated in Statement of Financial
Accounting   Standards  No.  123,  "Accounting  for   Stock-Based
Compensation",  ATSC would have been required to prepare  a  fair
value  model  for  such options and record  such  amount  in  the
financial  statements  as  compensation  expense.   Proforma  net
income  (loss) before extraordinary loss for Fiscal 1997,  Fiscal
1996,  and  Fiscal  1995 after taking into account  such  expense
would  have been $11.0 million, $8.2 million, and $(1.1) million,
respectively.  For purposes of this calculation, ATSC arrived  at
the  fair value of each stock grant at the date of grant by using
the  Black  Scholes  option  pricing  model  with  the  following
weighted average assumptions used for grants for the fiscal years
ended  January 31, 1998, February 1, 1997 and February  3,  1996:
risk-free  interest  rate of 6.2%, 5.8%, and 7.0%,  respectively;
expected   life  of  5.0  years,  4.3  years,  and   5.0   years,
respectively; and expected volatility of 67.9%, 55.2%, and 44.8%,
respectively.
     
     
11.  Income Taxes
-----------------
     
     The  provision for income taxes for the fiscal  years  ended
January 31, 1998, February 1, 1997, and February 3, 1996 consists
of the following:
                                      Fiscal Years Ended
                                 Jan. 31,  Feb. 1,    Feb. 3,
                                   1998      1997      1996
                                 -------   -------   --------
                                       (in thousands)
   Federal:
    Current..................... $14,427   $ 9,898    $ 1,400
    Deferred....................  (1,917)     (802)     2,249
                                  ------    ------     ------
      Total federal............   12,510     9,096      3,649
                                  ------    ------     ------
   State and local:
    Current....................   5,538      3,844        607
    Deferred...................    (769)      (152)       901
                                 ------     ------     ------
      Total state and local....   4,769      3,692      1,508
                                 ------     ------     ------
   Foreign:
   Current.....................     187        187        ---
    Deferred...................     ---        ---        ---
                                 ------     ------     ------
      Total foreign............     187        187        ---
                                 ------     ------     ------          
    Total......................  $17,466   $12,975    $ 5,157
                                  ======    ======     ======
     
     The  reconciliation between the provision for  income  taxes
and  the provision for income taxes at the federal statutory rate
for the fiscal years ended January 31, 1998, February 1, 1997 and
February 3, 1996 is as follows:
                                     
                                     
                                     Fiscal Years Ended
                                 ----------------------------
                                 Jan. 31,   Feb. 1,    Feb. 3,
                                  1998       1997       1996
                                 --------   -------    ------
                                       (in thousands)
Income before income taxes 
  and extraordinary loss........ $29,463   $21,642    $ 4,281
                                  ======    ======     ======
Federal statutory rate                35%       35%        35%
                                  ======    ======     ======
Provision for income taxes 
  at federal statutory rate..... $10,312   $ 7,575     $ 1,498
State and local income taxes, 
  net of federal income 
  tax benefit...................   3,800     2,273         980
Non-deductible amortization 
  of goodwill...................   3,500     3,429       3,327
Unremitted  earnings  of 
  foreign subsidiaries..........    (314)     (382)       (387)
Other...........................     168        80        (261)
                                  ------    ------      ------
Provision for income taxes...... $17,466   $12,975     $ 5,157
                                  ======    ======      ======
                                
======================================================================
<PAGE 27>

                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     
     
11. Income Taxes (Continued)
------------------------------
     
     The   tax  effects  of  significant  items  comprising   the
Company's  net  deferred tax assets as of January  31,  1998  and
February 1, 1997 are as follows:
     
                                       January 31, February  1,
                                           1998        1997
                                       ----------  -----------
                                           (in thousands)
   Current:
    Inventory..........................  $ 2,854    $ 2,070
    Accrued expenses...................    4,269      7,492
    Real estate........................   (1,634)    (1,433)
    Other..............................      ---       (172)
                                          ------     ------
   Total current.......................  $ 5,489    $ 7,957
                                          ======     ======
   Noncurrent:
    Depreciation and amortization......  $(4,982)  $ (6,528)
    Rent expense.......................    4,364      3,328
    Other..............................      901     (1,672)
                                          ------     ------
   Total noncurrent....................  $   283    $(4,872)
                                          ======     ======
     
     Income  taxes provided reflect the current and deferred tax
consequences of events that have been recognized in the Company's
financial  statements or tax returns.  U.S. federal income taxes
are provided on unremitted foreign earnings except those that are
considered  permanently reinvested, which  at  January  31, 1998
amounted to approximately $6,775,000.  However, if these earnings
were  not  considered permanently reinvested, under current law,
the  incremental  tax  on such undistributed  earnings would  be
approximately $2,022,000.
     
     
12.  Retirement Plans
---------------------
     
     Savings  Plan.  The Company maintains a defined contribution
401(k)  savings  plan for substantially all full-time  employees.
Participants may contribute to the plan an aggregate of up to 10%
of   their   annual  earnings.   The  Company  makes  a  matching
contribution  of  50%  with respect  to  the  first  3%  of  each
participant's  annual  earnings contributed  to  the  plan.   The
Company's contributions to the plan for Fiscal 1997, Fiscal  1996
and   Fiscal   1995  were  $519,000,  $390,000,   and   $337,000,
respectively.
     
     Pension Plan.  Substantially all full-time employees of  the
Company  are  covered  under  a noncontributory  defined  benefit
pension plan.  Through December 31, 1997, the pension plan was  a
"cash  balance pension plan".  Each participant accrued a benefit
based on compensation and years of service with the Company.   As
of  January  1,  1998, the Plan was amended and  the  formula  to
calculate  benefits  was changed.  The new  career  average  plan
formula was used to determine the funding status of the plan  for
fiscal  1997.  The Company's funding policy for the  plan  is  to
contribute annually the amount necessary to provide for  benefits
based  on  accrued  service and projected  pay  increases.   Plan
assets  consist  primarily  of  cash,  equity  and  fixed  income
securities.

===================================================================
<PAGE 28>
     
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
12.  Retirement Plans
---------------------
     
     The  following  table sets forth the funded  status  of  the
Pension  Plan at January 31, 1998, February 1, 1997 and  February
3,  1996,  in  accordance with Statement of Financial  Accounting
Standards No. 87, "Employers' Accounting for Pensions":
     
                                         Jan. 31,    Feb. 1,    Feb. 3,
                                           1998       1997       1996
                                         -------     -------   -------
                                            
                                            (dollars in thousands)
Actuarial present value 
  of benefits obligation:
Accumulated benefit obligation, 
  including vested benefits of
  $2,830,000, $2,435,000 and 
  $2,064,000, respectively..............  $3,820     $3,413     $2,893
                                           =====      =====      =====
Projected benefit obligation 
  for service rendered to  date.........  $3,820     $3,413     $2,893
Plan assets at fair value...............   5,128      4,745      2,537
                                           -----      -----      -----
Plan assets in excess of 
  projected benefit obligation
  (projected   benefit  obligation  
  in  excess  of   plan   assets).......   1,308      1,332       (356)
Unrecognized net gain...................  (1,286)      (802)      (231)
                                          ------      -----      -----
Prepaid (accrued) pension cost..........  $   22     $  530     $ (587)
                                          ======      =====      =====
                                
Net periodic pension cost for 
  Fiscal 1997, Fiscal 1996 and 
  Fiscal 1995 included the 
  following components:
Service cost/benefits earned 
  during the year....................... $   571     $  981     $  681
Interest cost on projected  
  benefit  obligation...................     250        213        185
Actual return on plan assets............    (907)      (527)      (104)
Net amortization and deferral...........     462        300       (132)
                                          ------      -----      -----
Net periodic pension cost..............  $   376     $  967     $  630
                                          ======      =====      =====
Assumptions used to determine 
  the projected benefit
  obligation and plan 
  assets were:
  Discount rate........................     7.50%      8.00%      6.75%
  Rate  of increase in 
    compensation level.................     4.00%      4.00%      4.00%
  Expected long-term rate of  
    return  on  assets.................     9.00%      9.00%      9.00%
     
     

13.  Stockholder's Equity
--------------------------

     The following summarizes the changes in stockholder's equity
during Fiscal 1997, Fiscal 1996 and Fiscal 1995:
                                                                       Total
                                             Additional                Stock-
                                     Common    Paid-in    Retained    holder's
                                     Stock     Capital    Earnings     Equity
                                     -----    --------    ----------  -------
                                
                                                  (in thousands)

Balance at January 28, 1995........  $  1     $311,115    $14,996    $326,112
  Net loss.........................   ---          ---       (876)       (876)
  Parent company contributions.....   ---          452        ---         452
                                      ---      -------     ------     -------
Balance at February 3, 1996........     1      311,567     14,120     325,688
  Net income.......................   ---          ---      8,667       8,667
  Parent company contributions.....   ---      132,385        ---     132,385
                                      ---      -------     ------     -------
Balance at February 1, 1997........     1      443,952     22,787     466,740
  Net  income......................   ---          ---     11,824      11,824
  Parent company contributions.....   ---        1,934        ---       1,934
                                      ---      -------     ------     -------
Balance at January 31, 1998........  $  1     $445,886    $34,611    $480,498
                                      ===      =======     ======     =======

==============================================================================
<PAGE 29>
                                
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
  

14.  Subsequent Event
---------------------
     
     Effective February 1, 1998, the Company elected to change  its
method  of  inventory valuation from the retail method  to  a  cost
method.   The  Company  believes the cost method  is  a  preferable
method  for  matching  the cost of merchandise  with  the  revenues
generated.  The cumulative effect of this accounting change and the
effect on future financial statements resulting from this change is
not  expected to be material.  It is not possible to determine  the
effect  of  the change on income in any previously reported  fiscal
years.