Talbots implements new $150 mn Expense Reduction Program

14 Apr '09

5 min read

The Talbots Inc announced results for the fourth quarter and fiscal year ended January 31, 2009. Talbots also announced that Aeon Co., Ltd., which through its wholly owned subsidiary is the Company's majority shareholder, has provided Talbots a new $150 million secured revolving loan facility.

This new loan supplements the Company's existing $215 million committed working capital facilities. The Company also announced that it is in discussions and has signed a non-binding letter of intent with Li & Fung Limited, the global sourcing and trading firm based in Hong Kong, to mutually explore a potential relationship for Li & Fung Limited to become Talbots primary global sourcing agent.

Fourth quarter net loss from continuing operations was $136.3 million or $2.55 per share, including special items, compared to last year's net loss of $10.3 million or $0.19 per share. Special items include:

• Total restructuring charge of $7.6 million, or $0.14 per share, the vast majority of which is severance related to the Company's recent downsizing;
• Non-cash charge of $0.3 million, or $0.01 per share, related to asset impairments.

Excluding these special items, the Company's fourth quarter adjusted net loss from continuing operations was $128.4 million or $2.40 per share compared to last year's adjusted net loss of $7.1 million or $0.13 per share on a comparable basis.

Also included in the Company's fourth quarter net loss from continuing operations was a non-cash charge of $66.0 million or $1.23 per share related to a valuation allowance against net deferred tax assets as required under SFAS No.109, “Accounting for Income Taxes.”

Fiscal year 2008 net loss from continuing operations was $144.5 million or $2.70 per share, including special items, compared to last year's breakeven net income per share. Special items include:

• Total restructuring charge of $17.8 million, or $0.33 per share, including severance and professional consulting fees;
• Non-cash charge of $2.8 million, or $0.05 per share, related to asset impairments.

Excluding these special items, the Company's fiscal year 2008 adjusted net loss from continuing operations was $123.9 million or $2.32 per share compared to last year's net income of $0.3 million or $0.00 per share on a comparable basis.

Also included in the Company's full year net loss from continuing operations was a non-cash charge of $66.0 million or $1.23 per share related to a valuation allowance against net deferred tax assets as required under SFAS No.109, “Accounting for Income Taxes.”

Trudy F. Sullivan, Talbots President and Chief Executive Officer, commented, “Our fourth quarter results were affected by the steep decline in consumer spending resulting from the deterioration in U.S. economic conditions. We are, however, proud of the bold actions we are taking not just to adjust to the economic downturn, but to do so in a way that positions the Company to be stronger and better when the recovery occurs. Our priority during these difficult times will continue to be addressing those areas within our control, including streamlining our business and tight management of our costs and inventory, while continuing with an acute focus on those measures which improve our cash flow and liquidity.”

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