Talbots Announces Plans to Close Kids and Mens Concepts
January 04 2008 - 7:30AM
Business Wire
The Talbots, Inc. (NYSE: TLB) today announced that after a thorough
evaluation of its business, it will exit its Talbots Kids and
Talbots Mens concepts by September 2008. The decision is part of
Talbots strategic business review that was announced on October 9,
2007, which is expected to be completed in the first quarter of
2008. The strategic review revealed that these concepts did not
demonstrate the potential to deliver acceptable long-term return on
investment. The executive management team, with the full support of
the Company�s Board of Directors, determined that discontinuing
these businesses will enable The Talbots, Inc. to redirect
resources and capital towards its core businesses, including
Talbots Misses, Petites, Womans, Collection, Accessories &
Shoes and J. Jill Missy, Petites and Womans. Trudy F. Sullivan, The
Talbots, Inc. president and Chief Executive Officer, commented,
�This is a very important strategic move that will greatly
contribute to our ability to focus and reinvigorate our core brands
and provide sustainable long-term shareholder value. By exiting
these concepts, we can focus exclusively on our company�s core
strength � the age 35 plus female market, where we believe there is
significant opportunity for profitable growth in both our Talbots
and J. Jill brands.� �I would like to sincerely thank everyone, who
over the years invested considerable time and effort in developing
Talbots Kids and Mens. Regrettably we must make these difficult
decisions that will help grow and improve our core business.� The
Talbots, Inc. will close approximately 78 stores throughout the
U.S. as a result of this decision, including 66 Talbots Kids and 12
Talbots Mens stores. The closures will impact approximately 800
full- and part-time positions, or approximately 5% of The Talbots
Inc. total workforce. The Company is considering ways to offer the
affected associates other opportunities, where feasible. As a
result of these actions, the Company currently anticipates total
revenue to be impacted by approximately $100 million on an
annualized basis. The Talbots, Inc. currently expects that the
ongoing operational benefit resulting from these closings would be
approximately $13 to $15 million, or $0.15 to $0.18 per diluted
share, on an annualized basis. The Talbots, Inc. anticipates
pre-tax expenses associated with the closings of approximately $5
million, or $0.06 per diluted share in the fourth quarter 2007.
Virtually all of this charge is related to the non-cash impairment
of store level assets. In addition, the Company expects to incur
pre-tax expenses of approximately $34 to $42 million, or $0.40 to
$0.49 per diluted share in fiscal 2008. The majority of this charge
is attributable to lease liabilities and non-cash impairment of
store level assets. Fourth Quarter Update Separately, The Talbots,
Inc. also announced today that its quarter-to-date sales for both
its Talbots and J. Jill brands are trending below its expectations.
With the important month of January still ahead, the Company will
provide further information regarding its outlook for fourth
quarter earnings per share when it reports its fourth quarter sales
results on February 7, 2008. The Company continues to evaluate
store growth, productivity and distribution channels as part of its
strategic business review and will provide additional information
regarding its 2008 operating plan on March 12, 2008, when it
reports fourth quarter and full year fiscal 2007 operating results.
The Talbots, Inc. is a leading international specialty retailer and
direct marketer of women�s apparel, shoes and accessories. The
Company currently operates a total of 1,428 stores in 47 states,
the District of Columbia, Canada and the U.K., with 1,157 stores
under the Talbots brand name and 271 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," "target," "would yield," or similar
statements or variations of such terms. All of the "outlook"
information (including expected future revenue impact, expected
future operational benefits, expected exit expenses, 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 exit costs and timing, outcome of
negotiations with landlords and other third parties, exit plan
inventory levels, valuations and sales, store traffic, levels of
store sales, ,and our internal plan and budget for regular-price
selling and markdown selling for the indicated forward periods. 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 forward-looking information 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 whether our recently
announced strategic review of our operations and any significant
changes which may result from or in connection with such process
will favorably impact our productivity and profitability in the
short-term or long-term and the timing of any such matters, the
risk that operational benefits expected to be realized from our
exit plans will not be achieved or may take longer to achieve than
expected, acceptance of the Company's fashions including its
seasonal fashions, effectiveness of the Company's brand awareness
and marketing programs and new promotional cadence strategy, and
any different or any increased negative trends in its regular-price
or markdown selling, retail economic conditions including consumer
spending trends, the current housing issues and uncertainty in the
financial and credit markets, 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 success
of our current executive-level searches, the risk that the J. Jill
business will not be successfully integrated, the risk that the
cost savings, operational efficiencies, and other synergies from J.
Jill acquisition 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 and the reaction of Talbots and J. Jill customers
and suppliers to the changes being made within the organization. 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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