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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2005

Commission file number 1-10738

ANNTAYLOR STORES CORPORATION

(Exact name of registrant as specified in its charter)

(212) 541-3300

(Registrant’s telephone number, including area code)

142 West 57^th Street, New York, NY 10019

(Former name, former address and former fiscal year, if changed since last report)

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  ¨.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ANNTAYLOR STORES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Quarters Ended April 30, 2005 and May 1, 2004

(unaudited)

See accompanying Notes to Condensed Consolidated Financial Statements.

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ANNTAYLOR STORES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

April 30, 2005 and January 29, 2005

(unaudited)

See accompanying Notes to Condensed Consolidated Financial Statements.

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ANNTAYLOR STORES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Quarters Ended April 30, 2005 and May 1, 2004

(unaudited)

See accompanying Notes to Condensed Consolidated Financial Statements.

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ANNTAYLOR STORES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

The Condensed Consolidated Financial Statements are unaudited but, in the opinion of management, contain all adjustments (which are of a normal recurring nature) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. All significant intercompany accounts and transactions have been eliminated.

The results of operations for the 2005 interim period shown in this Report are not necessarily indicative of results to be expected for the fiscal year.

The January 29, 2005 Condensed Consolidated Balance Sheet amounts have been derived from the audited Consolidated Balance Sheet of AnnTaylor Stores Corporation (the “Company”).

Detailed footnote information is not included in this Report. The financial information set forth herein should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2005. Certain Fiscal 2004 amounts have been reclassified to conform to the Fiscal 2005 presentation.

2. Earnings Per Share

Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share assumes the issuance of additional shares of common stock by the Company upon exercise of all outstanding stock options, conversion of all outstanding convertible securities and vesting of unvested restricted stock, if the effect is dilutive.

Options to purchase 2,801,437 and 1,315,200 shares of common stock were excluded from the above computations of weighted average shares for diluted earnings per share for the quarters ended April 30, 2005 and May 1, 2004, respectively. This was due to the antidilutive effect of the options’ exercise prices as compared to the average market price of the common shares during those periods.

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ANNTAYLOR STORES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

3. Share-based Payments

The Company accounts for stock-based awards and employees’ purchase rights under the Associate Discount Stock Purchase Plan using the intrinsic value-based method of accounting in accordance with Accounting Principles Board Opinion No. 25, under which no compensation cost is recognized for stock option awards granted at fair market value and employees’ purchase rights under the Associate Discount Stock Purchase Plan. Had compensation costs of option awards and employees’ purchase rights been determined under a fair value alternative method as stated in SFAS No. 148 “Accounting for Stock-Based Compensation—Transition and Disclosure, an amendment of FASB Statement No. 123”, the Company would have been required to prepare a fair value model for such options and employees’ purchase rights, and record such amount in the consolidated financial statements as compensation expense. Pro forma stock based employee compensation costs, net income and earnings per share, as they would have been recognized if the fair value method had been applied to all awards, are presented in the table below. The Company is currently evaluating the provisions of SFAS No. 123R, “Share-Based Payment”, and plans to adopt its provisions on January 29, 2006.

The estimated fair value of each option grant is calculated using the Black-Scholes option-pricing model, with the following weighted average assumptions:

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ANNTAYLOR STORES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

4. Long-Term Debt

During Fiscal 1999, the Company issued an aggregate of $199.1 million principal amount at maturity Convertible Subordinated Debentures due 2019 (the “Convertible Debentures”). In May 2004, the Company notified the holders that it would redeem these Convertible Debentures in June 2004 at $635.42 per $1,000.00 of the principal amount. The holders had the option to convert their Convertible Debentures into common stock of the Company prior to redemption, and, on June 18, 2004, all the Convertible Debentures were converted for an aggregate total of 5.4 million shares of common stock. The conversion of Convertible Debentures had no effect on diluted earnings per share.

In November 2003, Ann Taylor and certain of its subsidiaries entered into a Second Amended and Restated $175.0 million senior secured revolving credit facility (the “Credit Facility”) with Bank of America N.A. and a syndicate of lenders. The Credit Facility, which, at the Company’s option, provides for an increase in the total facility and the aggregate commitments thereunder up to $250.0 million, matures on November 14, 2008 and is used by Ann Taylor and certain of its subsidiaries for letters of credit and other general corporate purposes. There were no borrowings under the Credit Facility at any point during the first quarter of Fiscal 2005 or as of the date of this filing.

The Credit Facility permits the payment of cash dividends by the Company (and dividends by certain of its subsidiaries to fund such cash dividends) if, after the payment of such dividends, liquidity (as defined in the Credit Facility) is greater than $35 million. Certain subsidiaries of the Company are also permitted to: pay dividends to the Company to fund certain taxes owed by the Company; fund ordinary operating expenses of the Company not in excess of $500,000 in any fiscal year; repurchase common stock held by employees not in excess of $100,000 in any fiscal year; and for certain other stated purposes.

5. Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 123R (revised 2004), “Share-Based Payment” (“SFAS No. 123R”) which revised SFAS No. 123, “Accounting for Stock-Based Compensation”. This statement supercedes Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”). SFAS No. 123R addresses the accounting for share-based payment transactions with employees and other third parties, eliminates the ability to account for share-based compensation transactions using APB No. 25 and requires that the compensation costs relating to such transactions be recognized in the consolidated statement of operations. In April 2005, the SEC amended the compliance dates for SFAS No. 123R from fiscal periods beginning after June 15, 2005 to fiscal years beginning after June 15, 2005. The Company will continue to account for share-based compensation using the intrinsic value method set forth in APB No. 25 until adoption of SFAS No. 123R on January 29, 2006. The Company is currently evaluating the impact of adopting SFAS No. 123R.

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ANNTAYLOR STORES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

6. Employee Benefits

The following table summarizes the components of net periodic pension cost for the Company:

While no contributions to the Company’s pension plan are required in Fiscal 2005, as the fair value of plan assets has been greater than the benefit obligation, the Company may make a contribution during the year.

7. Securities Repurchase Program

In the first quarter of Fiscal 2005, the Company repurchased 300,000 shares of its common stock at a cost of approximately $7.4 million under the $100.0 million securities repurchase program announced in August 2004. The Company has repurchased a total of 2,400,000 shares of its common stock at a cost of approximately $57.3 million under the August 2004 plan through the date of this filing.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management Overview

The Company reported an increase in total net sales of 10.0% from the first quarter of Fiscal 2004, with Ann Taylor down 3.6% and Ann Taylor Loft up 20.5%. Comparable store sales for the first quarter of fiscal 2005 were down 3.1%. By division, comparable store sales for the first quarter were down 4.9% at Ann Taylor and down 1.5% at Ann Taylor Loft.

The retail environment remains very competitive. The Company plans to continue its store opening schedule using cash flow from operations. Management’s plan for future growth is based on offering clients updated classic merchandise at convenient, accessible, brand-appropriate locations. The Company’s ability to achieve this objective will be dependent on factors such as those outlined in the “Statement Regarding Forward-Looking Disclosures”.

The Company will continue to focus on inventory management and selling, general and administrative costs. Total inventory levels at the end of the first quarter of Fiscal 2005 increased approximately 8% on a per square foot basis compared to last year. Selling, general and administrative expenses for the first quarter decreased 0.8% over last year as a percentage of net sales.

Results of Operations

The following table sets forth consolidated income statement data expressed as a percentage of net sales:

The following table sets forth selected consolidated income statement data expressed as a percentage change from the prior period:

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Sales

The following table sets forth certain sales and store data:

Net sales increased $43.2 million or 10.0% in the first quarter of Fiscal 2005 over the comparable 2004 period due to the opening of 12 Ann Taylor stores, 76 Ann Taylor Loft stores and 8 Ann Taylor Factory stores, since the first quarter of Fiscal 2004.

Cost of Sales

Cost of sales is comprised of direct inventory costs for merchandise sold, including all costs to transport merchandise from third party suppliers to the Company’s distribution center. Buying and occupancy costs are excluded from cost of sales. Cost of sales as a percentage of net sales increased to 49.0% in the first quarter of Fiscal 2005 from 41.6% in the first quarter of Fiscal 2004. The increase in cost of sales as a percentage of net sales is primarily due to increased promotional activity at both divisions.

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Gross Margin

Gross margin as a percentage of net sales decreased to 51.0% in the first quarter of Fiscal 2005 from 58.4% in the first quarter of Fiscal 2004. The decrease in gross margin as a percentage of net sales is primarily due to lower full-price sales and lower margins achieved on non full-price sales, largely due to increased promotional activity at both divisions.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased in the first quarter of Fiscal 2005 to 45.2% of net sales from 46.0% of net sales in the comparable 2004 period. The decrease in selling, general and administrative expenses as a percentage of net sales primarily resulted from a decrease in the provision for management performance bonus and lower marketing costs, partially offset by an overall deleveraging of expenses due to the decrease in comparable store sales.

Interest Income

Interest income increased to approximately $1.8 million in the first quarter of Fiscal 2005 from approximately $1.0 million in the comparable 2004 period. The increase was primarily attributable to higher interest rates during the first quarter of Fiscal 2005 as compared to the first quarter of Fiscal 2004.

Interest Expense

Interest expense decreased to approximately $0.4 million in the first quarter of Fiscal 2005 from approximately $1.7 million in the comparable 2004 period. The decrease was primarily due to the conversion of the outstanding Convertible Debentures in the second quarter of Fiscal 2004, as discussed more fully below in “Liquidity and Capital Resources”.

Liquidity and Capital Resources

The Company’s primary source of working capital is cash flow from operations. The following table sets forth material measures of the Company’s liquidity:

For the first quarter of Fiscal 2005, net cash provided by operating activities totaled approximately $3.0 million, as compared to approximately $35.5 million for the first quarter of Fiscal 2004. Net cash provided by operating activities during the first quarter of Fiscal 2005 primarily resulted from an increase in working capital, partially offset by net income before depreciation and amortization. Cash provided by investing activities during the first quarter of Fiscal 2005 amounted to approximately $134.1 million related to the sale of available-for-sale securities, offset by capital expenditures for the opening of new stores. Cash provided by financing activities amounted to approximately $28.5 million, and related primarily to the proceeds from the exercise of stock options, offset by the repurchase of shares of the Company’s common stock during the first quarter of Fiscal 2005, which amounted to $7.4 million.

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The Company’s investment policy permits investments in auction rate securities which have stated maturities beyond three months but are priced and traded as short-term instruments due to the liquidity provided through the interest rate reset mechanism of 28 or 35 days. Investments in auction rate securities are classified as short-term investments on the Company’s consolidated balance sheets.

In the first quarter of Fiscal 2005, the Company repurchased 300,000 shares of its common stock at a cost of approximately $7.4 million under the $100.0 million securities repurchase program announced in August 2004. The Company has repurchased a total of 2,400,000 shares of its common stock at a cost of approximately $57.3 million under the August 2004 plan through the date of this filing.

The Company expects its total capital expenditure requirements in Fiscal 2005 will be approximately $175.0 to $185.0 million. The actual amount of the Company’s capital expenditures will depend in part on the number of stores opened, expanded and refurbished. The Company expects to use cash flow from operations to fund its capital expenditure requirements.

A portion of the Fiscal 2005 capital expenditures relates to costs associated with the relocation of the Company’s new headquarters in Times Square Tower in New York City, which is expected to be completed this June. As a result of this relocation, the Company adjusted the remaining lives of certain fixed assets to correlate to the expected move, the impact of which is not significant to the results of operations. In addition, the Company expects to record a one-time write-off of approximately $10.1 million for lease costs related to the existing offices at 142 West 57^th Street in New York City upon cessation of their use. The related lease is scheduled to expire in September 2006.

During Fiscal 1999, the Company issued an aggregate of $199.1 million principal amount at maturity Convertible Subordinated Debentures due 2019 (the “Convertible Debentures”). In May 2004, the Company notified the holders that it would redeem these Convertible Debentures in June 2004 at $635.42 per $1,000.00 of the principal amount. The holders had the option to convert their Convertible Debentures into common stock of the Company prior to redemption, and, on June 18, 2004, all the Convertible Debentures were converted for an aggregate total of 5.4 million shares of common stock. The conversion of Convertible Debentures had no effect on diluted earnings per share.

Critical Accounting Policies

Management has determined that the Company’s most critical accounting policies are those related to merchandise inventory valuation, asset impairment, and income taxes. The Company continually monitors its accounting policies to ensure proper application. There have been no changes to these policies as discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2005.

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Statement Regarding Forward-Looking Disclosures

Sections of this quarterly report on Form 10-Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, contain various forward-looking statements, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements may use the words “expect”, “anticipate”, “plan”, “intend”, “project”, “may”, “believe” and similar expressions. These forward-looking statements reflect the Company’s current expectations concerning future events, and actual results may differ materially from current expectations or historical results. Any such forward-looking statements are subject to various risks and uncertainties, including the failure by the Company to predict accurately client fashion preferences; decline in the demand for merchandise offered by the Company; competitive influences; changes in levels of store traffic or consumer spending habits; effectiveness of the Company’s brand awareness and marketing programs; the inability of the Company to secure and protect trademarks and other intellectual property rights in the United States and/or foreign countries; general economic conditions or a downturn in the retail industry; the inability of the Company to locate new store sites or negotiate favorable lease terms for additional stores or for the expansion of existing stores; lack of sufficient consumer interest in the Company’s Online Stores; a significant change in the regulatory environment applicable to the Company’s business; risks associated with the possible inability of the Company, particularly through its sourcing and logistics functions, to operate within production and delivery constraints; the impact of quotas, and the elimination thereof; an increase in the rate of import duties or export quotas with respect to the Company’s merchandise; financial or political instability in any of the countries in which the Company’s goods are manufactured; the potential impact of natural disasters and health concerns relating to severe infectious diseases, particularly on manufacturing operations of the Company’s vendors; acts of war or terrorism in the United States or worldwide; work stoppages, slowdowns or strikes; the inability of the Company to hire, retain and train key personnel, and other factors set forth in the Company’s filings with the SEC. The Company does not assume any obligation to publicly update or revise any forward-looking statements at any time for any reason.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The market risk of the Company’s cash and cash equivalents as of April 30, 2005 has not significantly changed since January 29, 2005. Information regarding the Company’s financial instruments and market risk as of January 29, 2005 is disclosed in the Company’s 2004 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company has conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report (the “Evaluation Date”). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on such evaluation, which included consideration of the facts and circumstances surrounding the lease accounting practices described below, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s reports filed or submitted under the Exchange Act.

In the first quarter of Fiscal 2005, the Company remediated a material weakness in internal control over financial reporting by correcting its method of accounting for construction allowances and free rent periods. The Company has implemented controls to ensure all future leases will be reviewed and accounted for in accordance with accounting principles generally accepted in the United States of America.

There were no other changes in the Company’s internal control over financial reporting during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On February 15, 2005, two former managers of the Company’s California stores filed a purported class action against AnnTaylor Retail, Inc. in Los Angeles County Superior Court alleging that the Company misclassified its store managers and assistant store managers as exempt from California overtime wage and hour laws, thereby depriving them of overtime pay. On May 5, 2005, a second purported class action was filed, although not yet served, against the Company in San Francisco County Superior Court by a former manager of one of the Company’s stores in California alleging violations of California labor laws with respect to overtime pay as well as adequate meal and rest periods. These actions are similar to numerous suits filed against retailers and others with operations in California.

The class members in both actions seek recovery in an unstated dollar amount of unpaid wages, statutory penalties, attorneys’ fees and costs and injunctive relief. These actions are at a very preliminary stage and, accordingly, it is too early to evaluate the likelihood of an unfavorable outcome. The Company intends to vigorously defend these actions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information concerning purchases made by the Company of its common stock for the periods indicated:

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Item 4. Submission of Matters to a Vote of Security Holders

AnnTaylor Stores Corporation’s 2005 Annual Meeting of Stockholders was held on April 28, 2005. The following matters were voted upon and approved by the Company’s stockholders at the meeting:

Item 5. Other Information

The Company entered into a letter agreement (“Letter Agreement”), dated May 12, 2005, with James M. Smith, Executive Vice President, Chief Financial Officer and Treasurer of the Company. Under the terms of the Letter Agreement, Mr. Smith received an increase in his annual base salary to $381,000 and a bonus of $100,000, repayable under certain conditions. He is also entitled to severance equal to his annual base salary and continuation of certain medical benefits for one year if he is terminated by the Company other than for “cause”. A copy of the Letter Agreement is filed as an exhibit to this Quarterly Report on Form 10-Q and incorporated herein by reference.

In addition, effective as of May 11, 2005, Anthony Romano’s (Executive Vice President, Corporate Operations) 2005 annual base salary was increased to $525,000.

Item 6. Exhibits

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SIGNATURES

Pursuant to the requirements 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.

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EXHIBIT INDEX

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