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Talbots profitable third quarter exceeds expectations
09
Dec '09
The Talbots, Inc reported adjusted third quarter net income from continuing operations, which ended October 31, 2009, of $17.2 million or $0.31 per diluted share, excluding restructuring and impairment charges, compared to last year's net loss of $12.4 million or $0.23 per share on a comparable basis.

Trudy F. Sullivan, Talbots President and Chief Executive Officer, commented, “Our third quarter results demonstrate tremendous operational discipline and solid execution of our strategic initiatives to drive improved performance of the business and restore profitability. The efforts over the past several quarters – particularly in the areas of strengthening our merchandise offering and tightly managing inventory and expense – have created a much stronger, leaner and profitable organization.”

Ms. Sullivan concluded, “We remain focused on executing our strategic plan to drive long-term sustainable growth and profitability of the business. As we move further into the holiday season, we are encouraged by the positive customer response to our merchandise assortment, evidenced by the continuation of improved full-price selling trends. Looking forward, we believe the steps we have and continue to take will help further solidify our operational results and deliver increased shareholder value.”

Third Quarter Highlights:

• Adjusted net income from continuing operations increased to $17.2 million, a $30 million improvement over the same period last year. Adjusted earnings per share from continuing operations of $0.31, well ahead of Company's previously announced guidance;
• Adjusted operating profit of $24.1 million, excluding restructuring and impairment, reflects an approximately $39 million increase over the same period last year. On a reported (GAAP) basis operating profit of $22.4 million, including restructuring and impairment, increased approximately $41 million over the same period last year;
• Total sales decreased 13.5%, slightly better than Company expectations. As anticipated, total sales were negatively impacted by significantly lower levels of markdown merchandise, resulting in an approximate 38% decline in markdown sales versus prior year;
• Full-price sales declined approximately 2% in the quarter, with strong sequential monthly improvement during the quarter. October full-price sales increased 10% versus prior year;
• Direct sales were essentially even with last year, driven by strength of two key catalogs – September and October, both of which outperformed prior year;
• Pure merchandise margin increased 980 basis points over prior year, due to strong IMU and improved full-price selling;
• SG&A expenses decreased 350 basis points, reflecting a $28 million or 22% decline in expenses over prior year;
• Total cost savings through third quarter are approximately $94 million. By the end of 2009, the Company anticipates it will be close to achieving its 2010 goal of $150 million in annualized cost savings;

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