Women's clothing company to close 75-100 stores by 2013
07 Oct '10
5 min read
• Gross margin to increase by approximately 450 bps to 500 bps from expected gross margin results in fiscal 2010. • Selling, general and administrative (SG&A) expenses to improve by approximately 100 bps to 150 bps from expected 2010 results. This would include an anticipated incremental marketing investment of approximately $60 million to $75 million for 2010 through 2013. • Adjusted operating income to be approximately 12% of sales, excluding special items. • Total capital expenditures to be approximately $60 million each year for the next three years to support strategic investments in store reimaging, upscale outlet expansion, and information technology systems. • Rationalization of existing store base reflecting approximately 75 to 100 store closings. This will be achieved through optimization of lease expirations and lease renewal dates. • Cash flow from operations to increase to approximately $150 million in 2013.
Updated Outlook for Third Quarter and Full Year Fiscal 2010 The Company reiterated its expectations for full year adjusted earnings per share from continuing operations in the range of approximately $0.84 to $0.92 per share, excluding special items. This compares to an adjusted loss per share from continuing operations of $0.10 reported last year. This anticipated result is based on an expected top-line sales increase of approximately 1% compared to the prior year period, which is below the Company's previous expectation for an increase of approximately low single digits.
For the third quarter of 2010, the Company has also reiterated its expectations for adjusted earnings per share from continuing operations in the range of approximately $0.22 to $0.28 per share, excluding special items, compared to last year's adjusted earnings per share from continuing operations of $0.31 per share. This anticipated result is based on an expected top-line sales decrease of approximately low-single digits, which is lowered from its previously provided outlook of a top-line sales increase of approximately low-single digits.
Ms. Sullivan concluded, “We are pleased with our overall first half performance and the successful launch in the third quarter of key initiatives, including an enhanced marketing campaign, segmentation strategy and store-reimage program. While customer traffic in our stores in the third quarter has been inconsistent, which is a reversal of the improving trends we saw in the first half of the year, sales in our direct business continue to trend positive quarter-to-date. That said, we do believe we are solidly positioned for the remainder of the fall as well as the upcoming holiday season. Further, we continue to have confidence that we have the right strategies in place to achieve long-term sustainable growth and profitability.”
The above outlook for fiscal 2010 and fiscal 2013 is based on the Company's internal assumptions and estimates, is subject to its accompanying forward-looking statement and is not a guarantee of future performance.
The Talbots, Inc. is a leading specialty retailer and direct marketer of women's apparel, shoes and accessories. At the end of the second quarter 2010, the Company operated 580 Talbots brand stores in 46 states, the District of Columbia, and Canada.
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