Check Out Line: Weakness at Talbots

April 14, 2009

talbots1Check out the deeper-than-expected quarterly loss at Talbots.

The women’s apparel retailer posted a fourth-quarter loss of $1.17 a share, excluding one-time items. That was far worse than what analysts polled by Reuters Estimates had expected. Sales fell 16 percent, while sales at stores open at least a year tumbled 25 percent.

Talbots is working to revamp its classic styles to boost sales in a slow market for women’s apparel. It has cut jobs, closed some units, suspended its dividend and frozen its pension plan to preserve cash. It also is looking to sell its J. Jill chain.

Stifel Nicolaus analyst Richard Jaffe, who has a “hold” rating on Talbots’ stock, called out the same-store sales decline as well as the 26-percent  decrease in direct sales. 

“Although we see a small improvement in product, the assortment clearly is not yet resonating with the baby boomer woman, who has become more discerning with her disposable income,” he wrote in a research note.

Independent analyst Jennifer Black, however, said she still expects Talbots to turn around and its shares were a smart investment for those with an investment horizon of at least a year. She also said Talbots’ new $150 million loan facility will carry it through the most difficult period. 

“The company is still in the early stages of transforming the Talbots brand,” she wrote in a note. “The stock looks cheap to us and we believe that long-term investors should add or build new positions at current prices.”

Talbots’ troubles show that some U.S. retailers are still struggling in the recession even as others are offering glimmers of hope. Nevertheless, sales at U.S. retailers slipped unexpectedly in March.

And the United States will continue to see more job losses and a falling gross domestic product for several more months, a top White House economic adviser said.

Also in the basket:

Completion of Cubs sale could drag on past May

“Value-trap” eBay versus “priced to perfection” Amazon

Pepsi sues Coke over energy drink claims

Amazon Says Error Removed Listings (New York Times)

European Retailers Join in Markdown Mania (WWD, subscription required)


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