Talbots implementing broader based marketing initiatives

08 Jun '11

5 min read

The Talbots Inc reported results for the quarter ended April 30, 2011.

First quarter income from continuing operations was $0.9 million, or $0.01 per share, compared to last year's loss from continuing operations of $7.1 million, or $0.12 per share. Adjusted first quarter income from continuing operations was $5.3 million, or $0.08 per share, excluding special items of $4.4 million, or $0.07 per share, compared to last year's adjusted income from continuing operations of $21.7 million, or $0.38 per share.

Trudy F. Sullivan, Talbots President and Chief Executive Officer, commented, "Our first quarter performance reflects an inconsistent customer response to our merchandise assortments, a challenging competitive environment and high levels of promotional activity. Although we did see a positive customer reaction to our March brand moment, our February and April brand moments underperformed and sales in each month of the quarter decreased year over year."

"We have been vigorously addressing our challenges, while continuing with the implementation of our key long-term initiatives. Our focus has been on directing our merchandise strategies to deliver a stronger balance of classic versus fashion forward styles in our assortments and implementing broader based marketing initiatives that better connect with our core and target customers to drive top-line growth."

First Quarter 2011 Operating Results:

• Operating income was approximately $3.2 million, compared to prior year's operating income of $2.9 million.
• Adjusted operating income, excluding special items of $4.4 million, was $7.6 million, a decrease of $24.1 million, compared to prior year's adjusted operating income of $31.7 million.
• Net sales decreased 6.0% to $301.3 million, compared to $320.7 million in the same period last year.
• Consolidated comparable sales decreased 7.7%. Beginning with the first quarter 2011, the Company will report consolidated comparable sales inclusive of its direct marketing channel, which includes Internet, catalog and red-line sales. Consolidated comparable sales exclude stores scheduled to close under the Company's store rationalization plan. Two years of comparable prior year periods have been prepared and are available on the Company's website under "Investor Relations/Financial Highlights."
• Store sales decreased 6.5% to $240.8 million, compared to $257.6 million in the same period last year. Comparable store sales decreased 8.2% in the first quarter of 2011, excluding stores scheduled to close under the Company's store rationalization plan.
• Direct marketing sales, including Internet, catalog and red-line, decreased 4.0% in the quarter to $60.5 million, compared to $63.1 million in the same period last year.
• Cost of sales, buying and occupancy as a percent of net sales increased 800 basis points to 64.4% compared to 56.4% last year. This increase is primarily due to an 880 basis point deterioration in merchandise margin, resulting from higher levels of markdowns and promotional activity. The increase was partially offset by an 80 basis point improvement in buying and occupancy expenses as a percent of net sales.

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