Talbots losses grow; restructuring continues
Triangle Business Journal
Clothing retailer Talbots Inc., which earlier this year closed three stores in the Triangle, posted significantly wider net losses during its fiscal 2008 second quarter.
Talbots, which includes Talbots and J. Jill stores, said it lost $25 million during the quarter ending Aug. 2, compared with a $13 million net loss during the same period in 2007. But the Hingham, Mass.-based company (NYSE: TLB) said that some of its results reflect one-time expenses such as store closures and job reductions, and that it has made progress reducing expenses.
Talbots has six Triangle locations after closing three stores, two in Raleigh and one in Durham, earlier this year.
Talbots’ overall company sales dipped to $528 million during the second quarter, down from $572 million over the fiscal 2007 second quarter. The number reflected disappointing returns despite end-of-season markdowns.
Same-store sales — sales in stores open for more than one year, a key industry benchmark — declined 12 percent overall, with an 11.7 percent decline for Talbots’ brand stores and a 13.2 percent drop for the company’s J. Jill division.
Investors follow same-store sales closely to determine how much sales growth comes from the opening of new stores.
At the same time, Talbots said it reduced total company inventory by 22 percent by the end of the second quarter and has kept inventory lean. During the quarter, Talbots also obtained a $50 million credit facility with majority shareholder Aeon Inc., increasing its overall borrowing capacity to $215 million.
Over the same period, Talbots closed 30 stores covering its children’s and men’s lines, with 35 more scheduled to shut down by mid-September. The company also reduced corporate staff by 9 percent.
Job cuts, store closures and other cost control measures are targeted to reduce $100 million in costs by the end of 2009.
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