TLB Talbots (The)

The Talbots, Inc. (NYSE:TLB) today provided an update on its outlook for the fourth quarter and fiscal year ending January 29, 2011.

Although the Company experienced solid selling trends from Thanksgiving through Cyber Monday, trends deteriorated in the last two weeks of December into January, despite our enhanced promotional posture. The Company believes this is due to a combination of factors, including a weaker than anticipated customer response to our current merchandise assortment, high levels of competitive promotional activity in the market and weather-related issues. As a result, quarter-to-date top line sales are down approximately 7% versus the fourth quarter of last year, which compares to the Company’s previously announced expectation for fourth quarter top-line sales in the range of flat to down low-single digits. Quarter-to-date comparable store sales are down approximately 6%.

Based on current sales levels, the Company expects fourth quarter adjusted loss per share from continuing operations, excluding special items, to be in the range of $0.15 to $0.19 per share. This compares to last year’s adjusted earnings per share from continuing operations, excluding special items, of $0.13 and is a decrease from its previously announced range of an adjusted loss from continuing operations, excluding special items, of $0.05 per share to adjusted earnings from continuing operations of $0.03 per share.

Full year adjusted earnings per share from continuing operations, excluding special items, are expected to be in the range of $0.56 to $0.60 per share. This compares to last year’s adjusted loss per share from continuing operations, excluding special items, of $0.10 and is a decrease from its previously announced range of $0.70 to $0.78 per share.

Trudy F. Sullivan, Talbots President and Chief Executive Officer, said, “While we are disappointed with our fourth quarter performance, we have accomplished a great deal this fiscal year and are a stronger, leaner and more profitable Company. Our balance sheet position is healthy and our debt level has been significantly reduced. With a solid financial foundation, we have the flexibility to invest as required to further enhance our operating platform and refresh our brand.”

“We will continue to evolve our strategic approach to achieve our long term objectives and remain keenly focused on merchandise initiatives to improve our assortment as well as branding and marketing strategies that will accelerate the pace of attracting new and reactivating lapsed customers, while continuing to please our core customer. We believe that this, coupled with our productivity initiatives, will drive improved results across our business and increase shareholder value,” concluded Ms. Sullivan.

The Company plans to report its fourth quarter and full fiscal year 2010 results on March 24, 2011 and will comment on its outlook for fiscal 2011 at that time.

The above outlook is based on the Company’s internal assumptions and estimates, is subject to its accompanying forward-looking statement and is not a guarantee of future performance.

The Talbots, Inc. is a leading specialty retailer and direct marketer of women’s apparel, shoes and accessories. At the end of the third quarter 2010, the Company operated 584 Talbots stores in 46 states, the District of Columbia, and Canada. Talbots brand on-line shopping site is located at www.talbots.com.

Cautionary Statement and Certain Risk Factors to Consider

This press release 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,” “projected,” “believe,” “anticipate,” “outlook,” “will,” “would,” “should,” “potential” or similar statements or variations of such terms. All of the information concerning our future liquidity, future financial performance and results, future credit facilities and availability, future cash flows and cash needs, strategic initiatives and other future financial performance or financial position, as well as our assumptions underlying such information, constitute forward-looking information. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about the Company, are not guarantees of future results or performance, and involve substantial risks and uncertainty, including assumptions and projections concerning our internal plan, regular-price and markdown selling, operating cash flows, liquidity, and credit availability for all forward periods. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the following risks and uncertainties:

• the continuing material impact of the U.S. economic environment on our business, continuing operations, liquidity, and financial results, including negative impact on consumer discretionary spending, substantial loss of household wealth and savings, significant tightening of the U.S. credit markets, and unemployment levels;
• the ability to successfully increase our store customer traffic and the success and customer acceptance of our merchandise offerings in our stores, on our website and in our catalogs;
• the risks associated with our efforts to successfully implement and achieve the benefits of our current strategic initiatives including store segmentation, store re-imaging, store rationalization, and any other future initiatives that we may undertake;
• the risks associated with the current increased promotional environment;
• the ability to accurately estimate and forecast future regular-price and markdown selling and other future financial results and financial position;
• the satisfaction of all borrowing conditions under our credit facility including accuracy of all representations and warranties, no events of default, absence of material adverse effect or change and all other borrowing conditions;
• the ability to access on satisfactory terms, or at all, adequate financing and sources of liquidity necessary to fund our continuing operations and strategic initiatives and to obtain further increases in our credit facilities as may be needed from time to time;
• the impact of the current regulatory environment and financial systems reforms on our business, including new consumer credit rules;
• the risks associated with our on-going efforts to adequately manage rising raw material and freight costs;
• the risks associated with our appointment of an exclusive global merchandise buying agent, including that the anticipated benefits and cost savings from this arrangement may not be realized or may take longer to realize than expected; and the risk that upon any cessation of the relationship, for any reason, we would be unable to successfully transition to an internal or other external sourcing function;
• the ability to continue to purchase merchandise on open account purchase terms at existing or future expected levels and with acceptable payment terms and the risk that suppliers could require earlier or immediate payment or other security due to any payment concerns;
• the risks and uncertainties in connection with any need to source merchandise from alternate vendors;
• any impact to or disruption in our supply of merchandise including from any current or any future increased political or other unrest or future labor shortages in various Asian countries which are our primary sources of merchandise supply or any other disruption in our ability to adequately obtain alternate merchandise supply as may be necessary;
• the ability to successfully execute, fund and achieve the expected benefits of supply chain initiatives;
• any significant interruption or disruption in the operation of our distribution facility or the domestic and international transportation infrastructure;
• the risk that estimated or anticipated costs, charges and liabilities to settle and complete the transition and exit from and disposal of the J. Jill business, including both retained obligations and contingent risk for assigned obligations, may materially differ from or be materially greater than anticipated;
• any future store closings and the success of and necessary funding for closing underperforming stores;
• the ability to reduce spending as needed;
• the ability to achieve our 2010 financial plan for operating results, working capital and cash flows;
• any negative publicity concerning the specialty retail business in general or our business in particular;
• the risk of impairment of goodwill and other intangible and long-lived assets; and
• the risks and uncertainties associated with the outcome of litigation, claims, tax audits, and tax and other proceedings and the risk that actual liabilities, assessments and financial impact will exceed any estimated, accrued or expected amounts or outcomes;
• the risk associated with our efforts in transforming our information technology systems to meet our changing business systems and operations.

All of our forward-looking statements are as of the date of this press release only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this press release or included in our other periodic reports filed with the SEC could materially and adversely affect our continuing operations and our future financial results, cash flows, prospects and liquidity. Except as required by law, we do 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 affecting such forward-looking statements 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 this release will be deemed to modify or supersede such statements in this release.

In addition to the information set forth in this press release, you should carefully consider the risk factors and risks and uncertainties included in our 2009 Annual Report on Form 10-K and other periodic reports filed with the SEC.

SEC Regulation G   Fourth quarter 2010 and full year 2010 Outlook, GAAP to non-GAAP ("adjusted") reconciling information The Company's outlook for the fourth quarter 2010 and full year 2010 excludes the impact of merger-related costs, restructuring charges, impairment charges, the change in tax estimate and the impact of the store re-image initiative. At this time, the Company cannot reasonably estimate the impact that restructuring charges, impairment charges and the store re-image initiative will have on operating income and income from continuing operations during these periods. Merger-related costs for the fourth quarter 2010 and full year 2010 are anticipated to be approximately $1.2 million and $28.9 million, respectively. The Company does not expect any similar additional tax items in the forward-looking periods, and the full year 2010 impact of the second quarter change in estimate is anticipated to be $5.5 million.   Management's comments on the fourth quarter 2010 and full year 2010 outlook refer to the following historical non-GAAP information for the fourth quarter 2009 and full year 2009.                                                             For the 52 weeks ended

January 30, 2010

For the 13 weeks ended

January 30, 2010

Amounts in thousands except per share amounts Loss from continuing operations $ (25,308 )       $ (0.47 ) $ (1,473 )       $ (0.03 ) Merger-related costs 8,216 0.15 8,216 0.15 Restructuring charges 10,273 0.19 613 0.01 Impairment of store assets   1,351     0.03     -     -   Adjusted (loss) income from continuing operations $ (5,468 ) $ (0.10 ) $ 7,356   $ 0.13