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Sales dip 8.4% to $275.9mn at Talbots in Q1 FY'12
26 May '12
4 min read
• Additionally, SG&A expenses were impacted by estimated incremental performance-based compensation for which no comparable compensation was recorded in the same period of the prior year.
• Total inventory decreased 6.2% to $166.2 million, compared to $177.1 million in the same period last year, due to a planned decrease in spring receipts.
• Total outstanding debt was $197.9 million, an increase of $111.1 million compared to $86.8 million last year.
• Total outstanding debt includes $122.9 million under the Company's revolving credit facility and $75.0 million under its term loan, entered into on February 16, 2012.
• In the first quarter, the Company opened four Talbots upscale outlets, closed five Talbots stores and ended the period with 516 stores, or 540 locations, including 47 Talbots upscale outlet stores.
Key Initiatives Update
Store Rationalization Plan
The Company closed eight locations, including five full stores, during the first quarter of fiscal 2012 and has closed 90 locations in total, including 74 full stores, since the acceleration of the Company's store rationalization plan in March 2011. The Company continues to expect to close approximately 110 locations in total and will look to close additional stores opportunistically in 2012.
The locations that have closed or are planned for closure contributed approximately $10.1 million in sales and $0.4 million in operating loss in the first quarter of 2012, including $0.8 million in restructuring charges. Last year's first quarter contribution was approximately $21.0 million in sales and approximately $4.0 million in operating loss, including $2.0 million in restructuring charges and $1.2 million in impairment of store assets.
Expense Management
The Company continues to make progress in pursuing opportunities to lower expenses. As a result, the Company has identified and implemented expense reductions that are expected to result in approximately $43.0 million in annualized cost savings toward its $50.0 million anticipated annualized cost reduction initiative announced on December 1, 2011. The Company expects to complete its cost reduction initiative by the end of fiscal 2012.
• Total inventory decreased 6.2% to $166.2 million, compared to $177.1 million in the same period last year, due to a planned decrease in spring receipts.
• Total outstanding debt was $197.9 million, an increase of $111.1 million compared to $86.8 million last year.
• Total outstanding debt includes $122.9 million under the Company's revolving credit facility and $75.0 million under its term loan, entered into on February 16, 2012.
• In the first quarter, the Company opened four Talbots upscale outlets, closed five Talbots stores and ended the period with 516 stores, or 540 locations, including 47 Talbots upscale outlet stores.
Key Initiatives Update
Store Rationalization Plan
The Company closed eight locations, including five full stores, during the first quarter of fiscal 2012 and has closed 90 locations in total, including 74 full stores, since the acceleration of the Company's store rationalization plan in March 2011. The Company continues to expect to close approximately 110 locations in total and will look to close additional stores opportunistically in 2012.
The locations that have closed or are planned for closure contributed approximately $10.1 million in sales and $0.4 million in operating loss in the first quarter of 2012, including $0.8 million in restructuring charges. Last year's first quarter contribution was approximately $21.0 million in sales and approximately $4.0 million in operating loss, including $2.0 million in restructuring charges and $1.2 million in impairment of store assets.
Expense Management
The Company continues to make progress in pursuing opportunities to lower expenses. As a result, the Company has identified and implemented expense reductions that are expected to result in approximately $43.0 million in annualized cost savings toward its $50.0 million anticipated annualized cost reduction initiative announced on December 1, 2011. The Company expects to complete its cost reduction initiative by the end of fiscal 2012.
The Talbots Inc
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