Talbots to reduce its corporate headcount

09 Jun '09

5 min read

Progress on $150 Million Expense Reduction Program
Talbots also announced that as part of its $150 million expense reduction program, it is further reducing corporate headcount across all locations by approximately 20%, including the elimination of open positions, for an annualized savings of approximately $21 million.

Net expense associated with the reduction, which is primarily for severance and severance benefits, is approximately $5.4 million. This amount has been recorded in the Company's continuing operations restructuring charge in the first quarter of fiscal 2009.

As a result of this and other actions, Talbots has now identified $125 million of annualized cost reductions, an increase from the $100 million the Company announced in April.

Update on Corporate Initiatives
As Talbots continues to execute on the strategic long-range plan, the Company has launched its Talbots Upscale Outlet concept. With a plan to open 12 stores in fiscal 2009, the first eight stores opened across the country in May in highly trafficked, highly visible outlet destinations, including Clinton Crossing in Connecticut and St. Augustine Premium Outlets in Florida. The Company believes Talbots Upscale Outlet concept represents a significant opportunity to generate revenue and introduce new customers to the brand.

As announced on June 8, 2009, the Company signed a definitive agreement to sell substantially all of the J. Jill brand assets to Jill Acquisition, LLC an affiliate of Golden Gate Capital, a San Francisco-based private equity investment firm, for approximately $75 million. The closing of the proposed transaction is anticipated to occur in the second quarter of fiscal 2009 and is subject to customary closing conditions, including the expiration of the antitrust waiting period. The Board of Directors of The Talbots, Inc. has unanimously approved the transaction. The transaction is not conditioned upon financing and no Company shareholder approval is required.

We continue to work through our due diligence process with Li & Fung Limited, the global sourcing and trading firm based in Hong Kong. As previously announced, the Company has signed a non-binding letter of intent to mutually explore a potential relationship for Li& Fung Limited to become Talbots primary global sourcing agent.

Results from Discontinued Operations
First quarter net loss from discontinued operations was $4.8 million or $0.09 per share, compared to last year's net loss of $16.9 million or $0.32 per share on a comparable basis.

Outlook
Talbots continues to approach the management of its business conservatively with lean inventories and ongoing disciplined cost management. The Company expects to report a loss from continuing operations in the second quarter in the range of approximately $0.50 to $0.58 per share, excluding any restructuring and impairment charges.

Talbots Inc

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