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Talbots to exclusively focus on its core brand business
26
Nov '08
The Talbots Inc announced results for the third quarter ended November 1, 2008. In addition, the Company announced it has secured agreements from Mizuho Corporate Bank, Ltd and Sumitomo Mitsui Banking Corporation to convert their existing uncommitted working capital lines to committed working capital lines.

Third quarter net loss from continuing operations was $14.8 million or $0.28 per diluted share compared to last year's net loss of $0.9 million or $0.02 per share on a comparable basis. The Company results from continuing operations include its core Talbots Misses, Petites, Womans, Collection, and Accessories & Shoes concepts.

Trudy F. Sullivan, President and Chief Executive Officer of The Talbots Inc., commented, “Our third quarter results reflect the impact of the deteriorating macro-economic conditions that started in mid-September. While we have had positive customer response to our reinvigorated Talbots brand merchandise and marketing efforts, this was not enough to offset a steep decline in consumer traffic and spending that we and most others across our entire industry have experienced.

“In the near-term, we continue to tightly control our inventory and significantly cutback discretionary spending, both of which drive further improvements in working capital as we focus on enhancing our cash flow to best manage the business.”

The Company has also announced that with the help of Aeon, its majority shareholder, it has been in negotiations to convert its uncommitted working capital lines to committed working capital lines. After a review of Talbots strategic plan, including the decision to sell the J. Jill brand, Mizuho Corporate Bank, Ltd and Sumitomo Mitsui Banking Corporation have agreed to convert their existing uncommitted $75 million and $50 million working capital lines of credit facility to committed lines, respectively, subject to the completion of due diligence and applicable loan documentation. Similar discussions are currently underway with the other lender banks, who have indicated their support of this direction.

Ms. Sullivan commented, “This is a great step forward for Talbots as it serves to stabilize our liquidity during these most difficult and uncertain times, enabling us to focus on implementing the key strategic initiatives that will drive improved performance of our business.”

Continued emphasis on inventory management results in total inventory down 23% at end of third quarter.

Improved merchandise operating gross margin of approximately 100 basis points over last year.

Completed the closing of non-core Talbots Kids/Mens/U.K. businesses.

Gained positive momentum with each new monthly merchandise delivery throughout the quarter as measured by improving sell through performance. This trend continues into November, particularly with regards to the gift giving assortment.

Positive consumer response to innovative marketing initiatives during the quarter resulted in healthy reactivation of lapsed customers.


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