Talbots CEO: Updated merchandise will drive sales
The Talbots, Inc. (NYSE: TLB) CEO Trudy Sullivan said leaner inventories, tighter expenses and more aggressive promotional strategies will drive growth for the women’s clothing retailer. Sullivan made the comments during a morning conference call.
“Although our current trends our somewhat stronger, it is too soon to declare success,” Sullivan said. “We know from our current research that our merchandise is not satisfying our customer and we understand that our assortments need to be more modern, sophisticated, inspiring and fun.”
Sullivan said updated and more fashionable merchandise would capture more casual shoppers.
“Our stores, catalog and website are now fully set for the holidays,” Sullivan said. “We will take advantage of high-traffic periods by offering new and compelling customer traffic-driving events.”
Sales from the Thanksgiving weekend generated “solid, positive” comparable store sales, she said.
The chief executive also said announcements are “imminent” for new employees in “key, critical” positions.
In a morning press release, Talbots reaffirmed its fourth-quarter guidance for a loss in the range of $0.05 to $0.10 per share, compared with breakeven net income a year earlier. Wall Street analysts expect, on average, a loss of $0.09 per share. Sullivan characterized the company’s guidance as “cautious” in a statement.
Before the opening, Talbots reported third-quarter net sales of $556 million, above analyst estimates of $547.2 million and down 2% from $568.6 million a year earlier. The retailer’s quarterly net loss totaled $9.4 million, or $0.18 per share, which is better than Wall Street projections of a $0.23 loss per share. During last year’s third quarter, Talbots earned $8 million, or $0.15 per share.
“Overall, we are disappointed in our third-quarter performance, despite an improvement versus our revised expectations. While we clearly understand and are addressing merchandise and execution issues, it stands to reason that our business was also impacted by the widely discussed challenging macro environment,” Sullivan said. “That said, there are many things that are within our control and we have taken immediate steps in both brands to drive improved results.”
The quarterly loss includes acquisition and financing-related charges of about $0.08 per share and about $0.06 per share in expenses associated with executive compensation and consulting fees.
Compared to the same period of 2006, sales at stores open more than a year declined 7.9% during the third quarter. Cost of sales rose 2% to $365.7 million, from $358.7 million during the year-ago quarter. Selling, general and administrative expenses rose 5% to $198.7 million, from $189 million a year earlier.
Also this morning, Talbots announced it awarded its advertising account to New York City-based Publicis. Boston-based Arnold Worldwide previously held Talbots’ advertising account since 1997.
In midday trading, TLB shares are up 3.34%, or $0.44, at $13.62. Over the last 52 weeks, shares have ranged from $12.52 to $26.71.
