Talbots reports sales results

May 8, 2008 08:15 AM E-mail| |Comments ()| Text size – +

Talbots Inc., the embattled retailer of women's clothing, said today that first-quarter sales fell 5.6 percent to $542 million.

The Hingham company only issued preliminary data of its quarterly results; a full report on the quarter's activity is scheduled for release May 21, a company spokeswoman said.

In a statement, president and chief executive Trudy F. Sullivan professed to see a silver lining in the preliminary results.

"Although our total company sales were softer than we had anticipated, we are pleased by our ability to achieve significantly improved merchandise gross margin, as it reflects progress in the implementation of one of our important strategic initiatives," she said in the statement. "Specifically, strong merchandise gross margin was driven by leaner total company inventory, down approximately 7 percent to last year, and better inventory management, which enabled the selling of our markdown merchandise at higher average unit retail values versus prior years."

At stores open for at least a year, overall first-quarter sales declined 9.8 percent, Talbots said. The company also operates the J. Jill brand. At J. Jill, sales at stores open at least year were down 20.2 percent; at stores bearing the Talbots nameplate, sales at stores open at least a year decreased 7.4 percent, the company said.

Talbots is battling several factors. The overall economy is slumping and consumers seem wary about spending money to upgrade their wardrobes. Meanwhile, a more casual attitude toward fashion means that many women are opting for Talbots' classically styled clothing on fewer occasions.

In January, Talbots said it would exit the children's and men's apparel businesses and slash 5 percent of its work force.

Last month, Talbots shares tumbled almost 30 percent on the day after Talbots disclosed that two lenders had canceled letters of credit to the firm.

The company said today: "The Talbots Inc. is in discussions with financial institutions to increase its working capital line of credit and will provide an update on its progress when appropriate. The company expects to be in compliance with all covenants of its acquisition term loan agreement for first quarter fiscal 2008."

Sullivan also said in her statement: "Looking at our Talbots brand, after a solid February and a very difficult March, which was felt across the industry, we experienced a significant improvement in April sales. We had a good customer response to our recent spring deliveries and a very successful response to our annual April best customer event, which led to a positive mid-single digit April comp and a corresponding increase in the brand's direct marketing sales."

The company also reconfirmed its previously announced outlook for fiscal 2008 earnings from continuing operations, excluding Talbots Kids, Mens, and UK operating results and close down costs, to be in the range of $0.47 to $0.52 per diluted share. The company is planning for a loss from discontinued operations in the range of $0.64 to $0.59 per share, for a total loss per share in the range of $0.17 to $0.07, compared with the $3.56 loss per share reported in fiscal 2007.

For recent Globe coverage of Talbots, please click here.
(By Chris Reidy, Globe staff)