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Significant increase in Q4 operating income at Talbots

13 Apr '10

4 min read

The Talbots Inc reported improved results for the fourth quarter and fiscal year ended January 30, 2010.

Adjusted fourth quarter income from continuing operations increased to $7.4 million or $0.13 per diluted share, excluding special items, compared to last year's adjusted loss from continuing operations of $123.4 million or $2.30 per share. Fourth quarter special items include:

• Merger costs of $8.2 million or $0.15 per share;
• Restructuring charges of $0.6 million or $0.01 per share.

“We delivered a strong fourth quarter, capping off a successful year of tremendous change and innovation. Our strategic transformation – re-energizing our brand, modernizing our merchandise, streamlining our organization and improving our business processes – firmly positions us for future growth and profitability,” said Trudy F. Sullivan, Talbots President and Chief Executive Officer.

“With the completion of the BPW merger and related transactions, we now have a very strong balance sheet and capital structure, so we can focus our energy on deepening our relationship with our customers and maximizing value for all of our stakeholders.”

Fourth Quarter 2009 Operating Results:

• Total sales from continuing operations decreased 3.7% to $315.9 million, compared to $327.9 million last year. Markdown selling declined 21% and full-price selling increased 10%.
• Comparable store sales declined 7.2% in the quarter, with January comps up high single digits. Store sales were $261.2 million versus $278.7 million last year.
• Direct marketing sales, including catalog and Internet, were $54.7, an 11% increase compared to last year's $49.2 million, reflecting strong customer demand, better fulfillment and lower return rates.
• Cost of sales, buying and occupancy as a percent of net sales improved 2,070 basis points compared to last year. This improvement was due primarily to a substantial increase in pure merchandise margin of 1,900 basis points, resulting from strong IMU, improved full-price selling and a decrease in buying and occupancy costs of 170 basis points.
• SG&A expense as a percent of net sales decreased 1,180 basis points, reflecting a $42.4 million or 30% decline in SG&A expenses over the prior year.
• Total inventory decreased 30.9% to $142.7 million, compared to $206.6 million at the end of fiscal 2008.

Full Year 2009 Operating Results:

Adjusted full year loss from continuing operations was $5.5 million or $0.10 per share, excluding special items, compared to last year's adjusted loss from continuing operations of $118.9 million or $2.25 per share. Full year 2009 special items include:

• Restructuring charges of $10.3 million or $0.19 per share;
• Merger costs of $8.2 million or $0.15 per share;
• Impairment of store assets of $1.4 million or $0.03 per share.

Completion of Comprehensive Financing Solution

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