Talbots to exclusively focus on its core brand business
26 Nov '08
5 min read
Company to exclusively focus on core Talbots brand business and pursue sale of J. Jill brand – retains Moelis & Company as financial advisor.
Total sales from continuing operations for the thirteen weeks ended November 1, 2008 were $357 million, versus last year's sales of $414 million. Retail store sales were $303 million compared to $345 million last year.
Comparable store sales declined 13.9% for the thirteen-week period.
Direct marketing sales for the thirteen-week period were $54 million, including catalog and Internet, compared to $69 million last year. This year-over-year decline was primarily due to a change in catalog circulation strategy. Specifically, the Company shifted the mailing of its key holiday/gift catalog into November this year versus October last year, which is expected to benefit fourth quarter direct sales.
Preliminary third quarter loss from discontinued operations was $152.4 million or $2.85 per diluted share, compared to last year's loss of $8.5 million, or $0.16 per share on a comparable basis.
During the third quarter the Company completed the closing of its Talbots Kids, Mens and UK operations and it made the decision to sell its J. Jill brand. As a result, all of these businesses have been reclassified to discontinued operations for the quarter and all prior periods.
In connection with the decision to pursue the sale of the J. Jill brand business, the Company is in the process of valuing J. Jill's assets and liabilities and has recorded a preliminary non-cash impairment charge related to the write-down of the J. Jill tangible and intangible assets of approximately $138 million after tax or approximately $2.57 per share. The assets and liabilities are stated at fair value and are included in the balance sheet as assets and liabilities held for sale.
Ms. Sullivan continued, “We expect the environment to remain difficult and volatile for the balance of this year. Therefore, we do not feel it is appropriate to comment on our outlook for fourth quarter and full year 2008 results until we are further into the period.”
“We just completed our first quarter delivering merchandise and creative under the leadership of our new design, product and marketing teams. And we have further sharpened our focus on our core business with our recent decision to pursue the sale of J. Jill. We are making solid steady progress in executing our strategic three-year turnaround plan and remain confident in the steps we are taking to position our Company for near and long term improvement and profitable growth,” concluded Ms. Sullivan.
The Talbots Inc. is in compliance with the covenants of its acquisition term loan agreement for third quarter fiscal 2008.
Talbots announced its plans to pursue the sale of the J. Jill brand on November 6, 2008. This will enable the Company to focus management resources and capital exclusively on its core Talbots business, which it believes is the right strategic decision to drive long-term increased shareholder value.
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