The Talbots, Inc. (NYSE:TLB) today announced results for the second
quarter ended August 2, 2008. Reported (GAAP) Results On a reported
(GAAP) basis, net loss for the second quarter was $25.0 million or
$0.47 per share, compared to reported net loss of $13.3 million or
$0.25 per share for the second quarter ended August 4, 2007.
Results from Ongoing Core Operations Second quarter net loss from
ongoing core operations was $18.3 million or $0.34 per share,
excluding a net loss of $4.4 million or approximately $0.08 per
share related to the operations of Talbots Kids, Mens and U.K.
non-core businesses, and excluding approximately $2.3 million ($4.2
million pre-tax) or $0.04 per share in restructuring charges
associated with strategic initiatives related to its ongoing core
operations. This result compares to last year�s net loss of $0.18
per share on a comparable basis. The Company believes that results
from ongoing core operations are a more meaningful measure of its
performance, versus its non-core operations which reflect
businesses that will be closed in early September. See the attached
tables for a reconciliation of GAAP and non-GAAP and comparison to
prior year. Second Quarter Highlights Total Company inventory down
22% at end of second quarter; Lean inventory position, improved IMU
and strategic change to monthly markdown cadence drive increase of
380 basis points in Talbots brand second quarter merchandise gross
margin from ongoing core operations versus last year; Total Company
merchandise gross margin from ongoing core operations improved 190
basis points over prior year; Obtained $50 million unsecured
subordinated term loan credit facility from Aeon (U.S.A.), Inc., a
wholly owned subsidiary of Aeon Co., Ltd. and the majority
shareholder of The Talbots Inc., increasing the Company�s total
working capital borrowing capacity to $215 million; Completed
closing of 30 Talbots Kids/Mens/U.K. stores, with remaining 35 to
be closed by mid-September. Close down costs for these non-core
operations much lower than expected; Streamlined organization and
reduced corporate staff by approximately 9%, with annualized cost
savings of approximately $14 million; On-track to reduce Company�s
cost structure by $100 million by end of 2009, with $50 million in
2008; July comparable store sales positive low single digits, with
strong sell-through on new product deliveries in August. Results
from Ongoing Core Operations/Non Core Operations Trudy F. Sullivan,
Talbots President and Chief Executive Officer, commented, �This was
a challenging quarter to drive top line sales, predominantly due to
the change in our Talbots brand annual June clearance strategy,
coupled with a difficult macro environment. While a year-over-year
shortfall in retail sales impacted the quarter, results were
largely offset by the Talbots brand merchandise gross margin
expansion. However, given the heavy inventory position of the J.
Jill brand, we took aggressive markdowns during the quarter, which
hurt gross margin and our second quarter total Company operating
performance. As a result, we began the fall season with an
appropriately lean inventory position.� �Also during the quarter,
we made significant progress in all activities related to the
closing of Talbots Kids, Mens and U.K. non-core businesses. As a
result, we will complete the closing of these businesses by
mid-September at a greatly reduced cost versus our original
expectation. We currently anticipate that total close down costs of
these non-core businesses to be a net loss of $0.27 to $0.32 per
share, compared to our original estimate for a net loss of $0.59 to
$0.64 per share.� Sales Results Total consolidated Company sales
for the thirteen week period ended August 2, 2008 were $528
million. By brand, retail store sales were $352 million for Talbots
compared to $392 million last year, and $74 million for J. Jill
compared to $80 million last year. Consolidated direct marketing
sales, including catalog and Internet, for the thirteen-week period
were $102 million, compared to $100 million last year. Total
Company comparable store sales declined 12.0% for the thirteen-week
period. By brand, comparable store sales for Talbots and J. Jill
decreased 11.7% and 13.2% respectively. Brand Commentary Ms.
Sullivan added, �We continued to see strong improvement in our
Talbots brand ongoing core operations merchandise gross margin,
which increased 380 basis points over the prior year, driven by a
combination of lean inventories, a monthly markdown cadence and
improved IMU. We cleared through the vast majority of our spring
and summer merchandise and have focused our attention on the fall
selling season.� �Looking ahead, we are encouraged by the
significantly improved sell-through rates we are seeing versus the
prior year from our new merchandise assortment across all
channels.� �For the J. Jill brand, our aggressive markdown posture
during the quarter resulted in a steep decline of 540 basis points
in the J. Jill brand merchandise gross margin compared to the prior
year, which partially offset the improvement at the Talbots brand.
Again, this initiative was a necessary step towards leveling the
inventory to enable full price selling.� �With this critical step
behind us, we were excited to receive positive customer response to
our product deliveries from our new J. Jill creative team in July
and an even greater response to the second delivery in August.
Poised with a new inventory management and merchandise assortment
plan, we are encouraged by the momentum that is beginning to build
in this brand.� OPERATING RESULTS FOR THE SIX-MONTH PERIOD Reported
(GAAP) Results On a reported (GAAP) basis, net loss for the six
months ended August 2, 2008 was $23.4 million or $0.44 per share,
compared to reported net loss of $8.0 million or $0.15 per share
for the same period last year. Results from Ongoing Core Operations
Net loss from ongoing core operations for the six months was $7.3
million or $0.14 per share, excluding a net loss of $10.3 million
or approximately $0.19 per share related to the operations of
Talbots Kids, Mens and U.K. non-core businesses, which are closing,
and excluding approximately $5.8 million ($9.4 million pre-tax) or
$0.11 per share in restructuring charges associated with strategic
initiatives related to its ongoing core operations. This result
compares to last year�s net loss of $2.1 million or $0.04 per share
on a comparable basis. Sales Results Total consolidated Company
sales were $1,070 million for the first half of the year. By brand,
retail sales were $715 million for Talbots compared to $779 million
last year and $146 million for J. Jill compared to $161 million
last year. Consolidated direct marketing sales for the six-month
period were $209 million, including catalog and Internet, compared
to $206 million last year. Total Company comparable store sales
declined 10.9% for the six-month period. By brand, comparable store
sales for Talbots decreased 9.5% and J. Jill�s comparable store
sales declined 16.8%. FULL YEAR 2008 OUTLOOK Ms. Sullivan
concluded, �In line with our strategic plan, we have put in place a
number of new operating disciplines over the past several months
that we believe will benefit our Company over the long term. While
this is the first year of our turnaround, we have made tremendous
progress in streamlining our operations and properly positioning
the Company for future growth.� �Looking at the second half of the
year, we understand the challenges presented by the difficult
macro-environment. Nevertheless, we believe we can drive improved
operating performance through a combination of stronger
merchandise, comprehensive and focused marketing, customer
prospecting and a continued emphasis on enhancing our customers�
overall shopping experience, while continuing to manage expenses in
a disciplined fashion. We have a great deal ahead of us, however,
we feel good about the positive signs we are seeing in our
business, and are reconfirming our outlook for earnings from
ongoing core operations for fiscal 2008, which for the back half is
in line with our historical performance of just a few years ago.�
The Company is planning for consolidated comparable store sales for
the full fall season to be in the range of flat to slightly
negative compared to last year, with the Talbots brand
approximately flat and the J. Jill brand down low to mid single
digits. The Company has reconfirmed its previously announced
outlook for fiscal 2008 earnings from ongoing core operations,
excluding Talbots Kids, Mens and U.K. operating results and close
down costs, to be approximately in the range of $0.47 to $0.52 per
diluted share. The Company is planning for a net loss from non core
operations in the range of approximately $0.27 to $0.32 per share.
This raises the outlook for total Company earnings per share to be
in the range of approximately $0.15 to $0.25 versus the previous
expectation for a net loss per share in the range of $0.17 to $0.07
and compares to a net loss of $3.56 per share reported in fiscal
2007. Additional Disclosures The Talbots, Inc. is in compliance
with all covenants of its acquisition term loan agreement for
second quarter fiscal 2008. Conference Call Details As previously
announced, Talbots will host a conference call today, August 27,
2008 at 10:00 a.m. local time to discuss second quarter 2008
results. To listen to the live call, please dial 866-336-2423,
passcode �TLB� or log on to www.thetalbotsinc.com/ir/ir.asp. The
call will be archived on its web site www.thetalbotsinc.com for a
period of twelve months. In addition, an audio replay of the call
will be available shortly after its conclusion and archived until
August 29, 2008. This call may be accessed by dialing (800)
642-1687; passcode 61366413. The Talbots, Inc. is a leading
specialty retailer and direct marketer of women�s apparel, shoes
and accessories. The Company currently operates stores in 867
locations in 47 states, the District of Columbia, and Canada, with
590 locations under the Talbots brand name and 277 locations 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,� �achieve,� �plan,� �look,�
�believe,� �anticipate,� �outlook,� �will,� �would,� �should,�
�guidance,� or similar statements or variations of such terms. All
of the information concerning our financial outlook (including
future profitability, future comparable stores sales, future
earnings and other future financial performance or operating
measures), future credit facilities, future merchandise purchases,
future cash needs, and other future financial performance or
financial position constitutes forward-looking information. Our
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 our internal plan including our budget
for regular-price and markdown selling and operating cash flow for
forward periods. All of our forward-looking statements are as of
the date of this release only. The Company can give no assurance
that such expectations or forward-looking statements will prove to
be correct. Actual results may differ materially from our
forward-looking statements. The Company does not undertake or plan
to update or revise any such forward-looking statements to reflect
actual results, changes in plans, 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 forward-looking statements
contained in or accompanying this release will be deemed to modify
or supersede such 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 the following risks: the impact of the continued
deterioration in the U.S. economic environment, including continued
negative impact on consumer discretionary spending, the disruption
and significant tightening in the U.S. credit and lending markets,
recessionary and inflationary pressures, high energy prices, and
declining value of the U.S. dollar; the success and customer
acceptance of our new merchandise offerings including our fall,
winter and other seasonal fashions and merchandise offerings; our
ability to accurately estimate and forecast future regular-price
and markdown selling and operating cash flow; achieving the
Company�s sales plan for the balance of the year for each of the
Talbots and J. Jill brands; achieving the Company�s operating cash
flow plan for the year; successfully executing the Company�s
strategic initiatives, including anticipated lower inventory
levels, expected operating expense and other cost reductions, the
success of the new promotional cadence for the Talbots brand,
reduced markdown exposure and improved gross margins, the
successful closing of the Talbots Kids and Talbots Mens business
concepts and closing of other underperforming stores; continued
ability to purchase merchandise on open account purchase terms at
expected levels; obtaining letter of credit facilities for
merchandise purchases from vendors who require such facilities; the
Company�s ability to obtain any necessary increases in its credit
facilities as may be needed from time to time; the Company�s
ability to reduce spending as needed; and the Company�s ability to
continue to satisfy its financial covenants under its existing debt
agreements. 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 at www.thetalbotsinc.com under �Investor Relations� and you
are urged to carefully consider all such factors. THE TALBOTS, INC.
AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED AUGUST 2,
2008 AND AUGUST 4, 2007 Amounts in thousands except per share data
� � � Thirteen Weeks Ended � Twenty-Six Weeks Ended August 2, �
August 4, August 2, � August 4, 2008 2007 2008 2007 � Net Sales $
528,014 $ 572,331 $ 1,070,452 $ 1,145,887 � Costs and Expenses �
Cost of sales, buying and occupancy 378,011 409,013 714,904 768,628
Selling, general and administrative 175,012 175,539 361,420 372,166
Restructuring charges 9,324 - 20,432 - Impairment of store assets �
220 � � - � � 1,163 � � - � � Operating (Loss) Income (34,553 )
(12,221 ) (27,467 ) 5,093 � Interest Interest expense 4,975 8,681
10,789 18,332 Interest income � 83 � � 451 � � 200 � � 819 � �
Interest Expense - net � 4,892 � � 8,230 � � 10,589 � � 17,513 � �
Loss Before Taxes (39,445 ) (20,451 ) (38,056 ) (12,420 ) � Income
Tax Benefit � (14,437 ) � (7,135 ) � (14,690 ) � (4,344 ) � Net
Loss $ (25,008 ) $ (13,316 ) $ (23,366 ) $ (8,076 ) � Net Loss Per
Share: � Basic $ (0.47 ) $ (0.25 ) $ (0.44 ) $ (0.15 ) � Diluted $
(0.47 ) $ (0.25 ) $ (0.44 ) $ (0.15 ) � � Weighted Average Number
of Shares of Common Stock Outstanding: � Basic � 53,442 � � 52,980
� � 53,372 � � 52,954 � � Diluted � 53,442 � � 52,980 � � 53,372 �
� 52,954 � � Cash Dividends Paid Per Share $ 0.13 � $ 0.13 � $ 0.26
� $ 0.26 � THE TALBOTS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED) AUGUST 2, 2008, FEBRUARY 2,
2008, AND AUGUST 4, 2007 Amounts in thousands � � � � August 2,
February 2, August 4, 2008 2008 2007 � Cash and cash equivalents $
16,034 $ 25,476 $ 8,160 Customer accounts receivable - net 199,533
210,853 192,122 Merchandise inventories 259,908 329,104 332,340
Other current assets � 100,320 � 86,414 � 82,636 Total current
assets 575,795 651,847 615,258 � Property and equipment - net
452,565 486,733 508,812 Goodwill 113,490 113,490 247,490 Trademarks
139,384 139,384 154,984 Other intangible assets - net 75,906 80,980
86,273 Deferred income taxes 3,530 - - Other assets � 24,001 �
30,545 � 30,812 � TOTAL ASSETS $ 1,384,671 $ 1,502,979 $ 1,643,629
� � Accounts payable $ 135,720 $ 171,830 $ 107,816 Accrued income
taxes - 4,829 - Accrued liabilities 163,899 185,735 142,357 Notes
payable to banks 34,000 - 12,800 Current portion of long-term debt
� 116,705 � 80,650 � 80,632 Total current liabilities 450,324
443,044 343,605 � Long-term debt less current portion 232,000
308,377 348,705 Deferred rent under lease commitments 147,720
144,569 135,090 Deferred income taxes 544 5,646 29,160 Other
liabilities 141,118 146,564 160,197 Stockholders' equity � 412,965
� 454,779 � 626,872 � TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $
1,384,671 $ 1,502,979 $ 1,643,629 THE TALBOTS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) FOR THE TWENTY-SIX WEEKS ENDED AUGUST 2, 2008 AND
AUGUST 4, 2007 Amounts in thousands � � � Twenty-Six Weeks Ended
August 2, � August 4, 2008 2007 � CASH FLOWS FROM OPERATING
ACTIVITIES: Net loss $ (23,366 ) $ (8,076 ) Depreciation and
amortization 67,839 65,910 Impairment of store assets 1,163 -
Deferred and other items (9,649 ) 4,198 Changes in: Customer
accounts receivable 11,282 12,593 Merchandise inventories 69,088
20,823 Accounts payable (35,890 ) (5,244 ) Accrued income taxes
(4,676 ) (1,863 ) All other working capital � (33,284 ) � 6,597 � �
42,507 � � 94,938 � � CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (32,627 ) (37,439 ) Proceeds
from disposal of property and equipment � 2,549 � � - � � (30,078 )
� (37,439 ) � CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds
(repayments) from working capital notes payable, net 34,000 (32,200
) Payments on long-term borrowings (40,248 ) (40,232 ) Proceeds
from options exercised 872 370 Excess tax benefit from options
exercised 96 141 Payment of debt issuance costs (750 ) - Cash
dividends (14,366 ) (14,145 ) Purchase of treasury stock � (1,396 )
� (519 ) � (21,792 ) � (86,585 ) � EFFECT OF EXCHANGE RATE CHANGES
ON CASH (79 ) 1,323 � NET DECREASE IN CASH AND CASH EQUIVALENTS
(9,442 ) (27,763 ) � CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
� 25,476 � � 35,923 � � CASH AND CASH EQUIVALENTS, END OF PERIOD $
16,034 � $ 8,160 � SEC Regulation G � THE TALBOTS, INC. AND
SUBSIDIARIES Reconciliation of GAAP Presentation to Ongoing Core
Operations and Non-Core Businesses and Ongoing Core Operations
Before Restructuring Charges Presentation Amounts in thousands
except per share data (Unaudited) � � � GAAP Basis � � Non-GAAP �
GAAP Basis � � Non-GAAP August 2, Non-GAAP August 2, August 4,
Non-GAAP August 4, 2008 Adjustments 2008 2007 Adjustments 2007 (13
weeks) (13 weeks) (13 weeks) (13 weeks) (13 weeks) (13 weeks) � Net
Sales $ 528,014 $ (19,845 ) (a) $ 508,169 $ 572,331 $ (21,214 ) (a)
$ 551,117 � Costs and Expenses Cost of sales, buying and occupancy
378,011 (17,389 ) (a) 360,622 409,013 (20,863 ) (a) 388,150
Selling, general and administrative 175,012 (4,285 ) (a) 170,727
175,539 (6,820 ) (a) 168,719 Restructuring charges: kids, mens,
U.K. 5,096 (5,096 ) (b) - - - - Restructuring charges: other 4,228
(c) - 4,228 - - - Impairment of store assets � 220 � (d) � - � �
220 � � - � � - � � - � � Operating Loss (34,553 ) 6,925 (27,628 )
(12,221 ) 6,469 (5,752 ) � Interest Interest expense 4,975 4,975
8,681 8,681 Interest income � 83 � � 83 � � 451 � � 451 � �
Interest Expense - net � 4,892 � � 4,892 � � 8,230 � � 8,230 � �
Loss Before Taxes (39,445 ) (20,451 ) � Loss From Ongoing Core
Operations Before Taxes n/a (32,520 ) n/a (13,982 ) Income Tax
Benefit: Ongoing Core Operations n/a (11,901 ) (e) � (11,901 ) n/a
(4,547 ) (e) � (4,547 ) Net Loss From Ongoing Core Operations n/a
(20,619 ) n/a (9,435 ) � Net Loss Per Diluted Share From Ongoing
Core Operations n/a $ (0.39 ) n/a $ (0.18 ) � Loss From Non-core
Businesses Before Taxes n/a (6,925 ) (6,925 ) n/a (6,469 ) (6,469 )
Income Tax Benefit: Non-core Businesses n/a � (2,536 ) (e) � (2,536
) n/a � (2,588 ) (e) � (2,588 ) Loss From Non-core Businesses n/a
(4,389 ) n/a (3,881 ) � Net Loss Per Diluted Share From Non-core
Businesses n/a $ (0.08 ) n/a $ (0.07 ) � Income Tax Benefit �
(14,437 ) � 14,437 � (e) � (7,135 ) � 7,135 � (e) � Net Loss $
(25,008 ) $ - � $ (25,008 ) $ (13,316 ) $ - � $ (13,316 ) � Net
Loss Per Share � Basic $ (0.47 ) $ (0.47 ) $ (0.25 ) $ (0.25 ) �
Diluted $ (0.47 ) $ (0.47 ) $ (0.25 ) $ (0.25 ) � � � � � � � � � �
� � � � � � � � Loss From Ongoing Core Operations Before Taxes n/a
(32,520 ) n/a (13,982 ) Restructuring charges: other n/a � 4,228 �
(f) n/a � - � Loss From Ongoing Core Operations Before Taxes and
Restructuring n/a (28,292 ) n/a (13,982 ) � Income Tax Benefit on
Ongoing Core Operations Before Restructuring n/a � (9,969 ) n/a �
(4,547 ) Net Loss From Ongoing Core Operations Before Restructuring
n/a (18,323 ) n/a (9,435 ) � Net Loss Per Diluted Share From
Ongoing Core Operations Before Restructuring n/a $ (0.34 ) n/a $
(0.18 ) � � � � � � � � � � � � � � � � � � Weighted Average Number
of Shares of Common Stock Outstanding � Basic � 53,442 � � 53,442 �
� 52,980 � � 52,980 � � Diluted � 53,442 � � 53,442 � � 52,980 � �
52,980 � � Cash Dividends Paid Per Share $ 0.13 � $ 0.13 � $ 0.13 �
$ 0.13 � � (a) � Adjusted to exclude results of kids, mens, and
U.K. businesses. � (b) Adjusted to exclude restructuring charges
related to kids, mens, and U.K businesses. Restructuring charges
primarily relate to store leases and severance. � (c) Restructuring
charges primarily relate to severance and professional services
related to the Company's strategic initiatives and are part of the
Company's ongoing core operations. � (d) Impairment charge relates
to the closure of under-performing core business stores and is part
of the Company's ongoing core operations. � (e) The GAAP basis
income tax expense has been allocated to the Company's ongoing core
operations and non-core businesses. � (f) Amount shown is on a
pre-tax basis; after tax, amount would be approximately $2.3 M. SEC
Regulation G � THE TALBOTS, INC. AND SUBSIDIARIES Reconciliation of
GAAP Presentation to Ongoing Core Operations and Non-Core
Businesses and Ongoing Core Operations Before Restructuring Charges
Presentation Amounts in thousands except per share data (Unaudited)
� � � GAAP Basis � � Non-GAAP � GAAP Basis � � Non-GAAP August 2,
Non-GAAP August 2, August 4, Non-GAAP August 4, 2008 Adjustments
2008 2007 Adjustments 2007 (26 weeks) (26 weeks) (26 weeks) (26
weeks) (26 weeks) (26 weeks) � Net Sales $ 1,070,452 $ (41,158 )
(a) $ 1,029,294 $ 1,145,887 $ (45,836 ) (a) $ 1,100,051 � Costs and
Expenses Cost of sales, buying and occupancy 714,904 (35,525 ) (a)
679,379 768,628 (41,243 ) (a) 727,385 Selling, general and
administrative 361,420 (11,343 ) (a) 350,077 372,166 (14,476 ) (a)
357,690 Restructuring charges: kids, mens, U.K. 11,042 (11,042 )
(b) - - - - Restructuring charges: other 9,390 (c) - 9,390 - - -
Impairment of store assets � 1,163 � (d) � - � � 1,163 � � - � � -
� � - � � Operating (Loss) Income (27,467 ) 16,752 (10,715 ) 5,093
9,883 14,976 � Interest Interest expense 10,789 10,789 18,332
18,332 Interest income � 200 � � 200 � � 819 � � 819 � � Interest
Expense - net � 10,589 � � 10,589 � � 17,513 � � 17,513 � � Loss
Before Taxes (38,056 ) (12,420 ) � Loss From Ongoing Core
Operations Before Taxes n/a (21,304 ) n/a (2,537 ) Income Tax
Benefit: Ongoing Core Operations n/a (8,223 ) (e) � (8,223 ) n/a
(390 ) (e) � (390 ) Net Loss From Ongoing Core Operations n/a
(13,081 ) n/a (2,147 ) � Net Loss Per Diluted Share From Ongoing
Core Operations n/a $ (0.25 ) n/a $ (0.04 ) � Loss From Non-core
Businesses Before Taxes n/a (16,752 ) (16,752 ) n/a (9,883 ) (9,883
) Income Tax Benefit: Non-core Businesses n/a � (6,467 ) (e) �
(6,467 ) n/a � (3,954 ) (e) � (3,954 ) Loss From Non-core
Businesses n/a (10,285 ) n/a (5,929 ) � Net Loss Per Diluted Share
From Non-core Businesses n/a $ (0.19 ) n/a $ (0.11 ) � Income Tax
Benefit � (14,690 ) � 14,690 � (e) � (4,344 ) � 4,344 � (e) � Net
Loss $ (23,366 ) $ - � $ (23,366 ) $ (8,076 ) $ - � $ (8,076 ) �
Net Loss Per Share � Basic $ (0.44 ) $ (0.44 ) $ (0.15 ) $ (0.15 )
� Diluted $ (0.44 ) $ (0.44 ) $ (0.15 ) $ (0.15 ) � � � � � � � � �
� � � � � � � � � Loss From Ongoing Core Operations Before Taxes
n/a (21,304 ) n/a (2,537 ) Restructuring charges: other n/a � 9,390
� (f) n/a � - � Loss From Ongoing Core Operations Before Taxes and
Restructuring n/a (11,914 ) n/a (2,537 ) � Income Tax Benefit on
Ongoing Core Operations Before Restructuring n/a � (4,599 ) n/a �
(390 ) Net Loss From Ongoing Core Operations Before Restructuring
n/a (7,315 ) n/a (2,147 ) � Net Loss Per Diluted Share From Ongoing
Core Operations Before Restructuring n/a $ (0.14 ) n/a $ (0.04 ) �
� � � � � � � � � � � � � � � � � Weighted Average Number of Shares
of Common Stock Outstanding � Basic � 53,372 � � 53,372 � � 52,954
� � 52,954 � � Diluted � 53,372 � � 53,372 � � 52,954 � � 52,954 �
� Cash Dividends Paid Per Share $ 0.26 � $ 0.26 � $ 0.26 � $ 0.26 �
� (a) � Adjusted to exclude results of kids, mens, and U.K.
businesses. � (b) Adjusted to exclude restructuring charges related
to kids, mens, and U.K. businesses. Restructuring charges primarily
relate to store leases and severance. � (c) Restructuring charges
primarily relate to severance and professional services related to
the Company's strategic initiatives and are part of the Company's
ongoing core operations. � (d) Impairment charge relates to the
closure of under-performing core business stores and is part of the
Company's ongoing core operations. � (e) The GAAP basis income tax
expense has been allocated to the Company's ongoing core operations
and non-core businesses. � (f) Amount shown is on a pre-tax basis;
after tax, amount would be approximately $5.8 M. SEC Regulation G �
THE TALBOTS, INC. AND SUBSIDIARIES Reconciliation of GAAP
Presentation Net Income to Non-GAAP Net Income from Ongoing Core
Operations (Unaudited) � � Outlook January 31, 2009 Actual February
2, 2008 (52 weeks) (52 weeks) � Net income (loss) per share on a
GAAP basis $ 0.15 - $0.25 ($3.56 ) Impact of the impairment of J.
Jill intangibles - 2.71 Losses and costs related to the closing of
the Talbots Kids, Mens, and U.K. non-core businesses � 0.32 - 0.27
0.24 � Net income (loss) per share from ongoing core operations on
a non-GAAP basis $ 0.47 - $0.52 ($0.61 ) THE TALBOTS, INC. AND
SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Presentation of
Gross Margin Statistics (Unaudited) � � GAAP Basis:Ongoing
CoreOperations and Non-core Businesses � Non-Core Operations �
Non-GAAP Basis: Ongoing CoreOperations Only Talbots brand Q2 2008
merchandise gross margin improvement (decline) over Q2 2007 290
basis points (90 basis points) 380 basis points � � Total company
Q2 2008 merchandise gross margin improvement (decline) over Q2 2007
130 basis points (60 basis points) 190 basis points
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