Talbots Revises First Quarter Outlook
May 03 2007 - 7:30AM
Business Wire
The Talbots, Inc. (NYSE: TLB) today announced that earnings per
share on a reported basis for the first quarter ending May 5, 2007
are expected to be in the range of $0.07 to $0.11, compared to its
previously announced expectation of $0.36 - $0.43 earnings per
share, primarily due to significantly weaker than expected Talbots
brand April sales. The Talbots, Inc. total company comparable store
sales are expected to be negative low to mid single digits for the
first quarter, compared to its previously announced expectation of
positive low single digits. The total company�s revised first
quarter outlook is currently as follows: Current Q1 2007 Earnings
Per Share Outlook EPS EPS Q1 2007 Q1 2006 Talbots Operation $ 0.30
- $0.32� $ 0.51� J. Jill Operation (0.10) - (0.08) Acquisition
Related Costs (0.13) Total Company Reported EPS (GAAP) $ 0.07 -
$0.11� $ 0.51� Arnold B. Zetcher, Talbots Chairman, President and
Chief Executive Officer, commented, �While we experienced some
fluctuation in our sales trends in the first quarter, primarily at
the core Talbots brand, we were on track to achieve our previously
announced total company earnings per share expectations as we
entered April.� �In March, for the Talbots brand, we had very
strong regular-price selling across all channels, posting high
double-digit, regular-price comps in weeks two through four. These
strong sales trends were offset by the softness in our mid-season
sale event, which began on March 22nd and featured the same
merchandise that did not perform well at regular-price in February.
We took deeper than planned discounts in order to move our
clearance merchandise.� �Although our Talbots brand sale event was
softer than anticipated, we entered April with optimism because of
the strength of March�s regular-price selling and our marketing
programs, which included a broad-based best customer event.
However, beginning on April 4th, we started seeing a dramatic
decline in our regular-price sales trends, which then continued
throughout the month. We believe this was driven by a combination
of factors, including adverse weather in the first few weeks of the
period, the impact of the Easter shift and a much weaker than
anticipated customer response primarily to our casual merchandise.
At this time, due to our April performance we anticipate that
Talbots brand first quarter comparable store sales will be in the
negative low to mid single digit range, versus our previous
expectation for positive low single digits.� �For our J. Jill
brand, we currently anticipate that first quarter comparable store
sales will be approximately flat with last year, below our previous
expectations of positive low-single digits. Our March and April
comps are positive, partially reflecting a favorable customer
response to some of the product adjustments our J. Jill
merchandising team has been able to make. This gives us confidence
that we are moving in the right direction, particularly in color
and design.� �We still have a great deal of work ahead of us, but
we are making progress to improve the performance of our J. Jill
brand. We look forward to presenting a broader selection of apparel
developed by our new merchandising team beginning in the second
quarter and are hopeful for stronger selling trends across all
channels in the J. Jill brand.� �For the Talbots brand, we have
strongly enhanced our marketing program for the remainder of the
spring season and have put a number of actions in place to help
drive increased customer traffic and sales. Specifically, we have
added a Mother�s Day Sweepstakes event, a special tee-shirt
promotion that will run in May, and double points for our Talbots
Charge Classic Awards customers throughout the month of June, among
others. We are hopeful that these initiatives will help build
healthier momentum in our business.� �As we look ahead, however, we
remain cautious, particularly given our April sales trends. We
expect to provide additional information regarding our revised
outlook for full year 2007, when we report first quarter earnings
results on May 23rd.� The Talbots, Inc. is a leading international
specialty retailer and cataloger of women�s, children�s and men�s
apparel, shoes and accessories. The Company currently operates a
total of 1,378 stores in 47 states, the District of Columbia,
Canada and the U.K., with 1,131 stores under the Talbots brand name
and 247 stores under the J. Jill brand name. Both brands target the
age 35 plus customer population. Talbots brand on-line shopping
site is located at www.talbots.com and the J. Jill brand on-line
shopping site is located at www.jjill.com. The foregoing contains
forward-looking information within the meaning of The Private
Securities Litigation Reform Act of 1995. These statements may be
identified by such forward-looking terminology as �expect,� �look,�
�believe,� �anticipate,� �outlook,� �will,� �would,� �would yield,�
or similar statements or variations of such terms. All of the
�outlook� information (including future revenues, future comparable
sales, future earnings, future EPS, and other future financial
performance or operating measures) constitutes forward-looking
information. Our outlook and other forward-looking statements are
based on a series of expectations, assumptions, estimates and
projections about our Company which involve substantial risks and
uncertainty, including assumptions and projections concerning
integration costs, purchase-related accounting adjustments,
acquisition synergies and, for each of our brands, store traffic,
levels of store sales including meeting our internal plan and
budget for regular-price selling and markdown selling for the
indicated forward periods, and customer preferences. All of our
outlook information and other forward-looking statements are as of
the date of this release only. The Company can give no assurance
that such outlook or expectations will prove to be correct and does
not undertake or plan to update or revise any �outlook� information
or any other forward-looking statements to reflect actual results,
changes in assumptions, estimates or projections, or other
circumstances occurring after the date of this release, even if
such results, changes or circumstances make it clear that any
projected results will not be realized. Any public statements or
disclosures by us following this release which modify or impact any
of the outlook or other forward-looking statements contained in or
accompanying this release will be deemed to modify or supersede
such outlook or statements in or accompanying this release. Our
forward-looking statements involve substantial known and unknown
risks and uncertainties as to future events which may or may not
occur, including acceptance of the Company�s fashions including its
seasonal fashions, effectiveness of the Company�s brand awareness
and marketing programs, any different or any increased negative
trends in its regular-price or markdown selling, success of our
expected marketing events in driving store traffic and store and
direct marketing sales, success of our catalogs in driving both our
direct marketing sales and in driving store traffic, the Company�s
ability to anticipate and successfully respond to constantly
changing customer tastes and preferences and to produce the
appropriate balance of merchandise offerings, the Company�s ability
to sell its merchandise at regular prices as well as its ability to
successfully execute its sale events including the timing and
levels of markdowns and appropriate balance of available markdown
inventory, our ability to accurately estimate and forecast future
full-price and markdown selling for each of our brands, the risk
that the J. Jill business will not be successfully integrated, the
risk that the J. Jill merchandise changes will not be well
accepted, the risk that the cost savings, operational efficiencies,
and other synergies from the transaction may not be fully realized
or may take longer to realize than expected, the risk associated
with integrating and operating profitably and successfully as a
multi-brand chain for the first time, the risk that the acquisition
will disrupt Talbots or J. Jill�s core business, the reaction of
Talbots and J. Jill customers and suppliers to the changes being
made within the organization as a result of the transaction,
diversion of management time on acquisition-related issues,
effectiveness and profitability of new concepts, the risks
associated with our current announced search for a successor for
our chief executive officer and the risks associated with a CEO
succession, any difference between estimated and actual stock
option expense, and retail economic conditions including consumer
spending. In each case, actual results may differ materially from
such forward-looking information. Certain other factors that may
cause actual results to differ from such forward-looking statements
are included in the Company�s periodic reports filed with the
Securities and Exchange Commission and available on the Talbots
website under �Investor Relations� and you are urged to carefully
consider all such factors.
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