Talbots Reports Second Quarter 2008 Results

-Company Reconfirms 2008 EPS Outlook for Ongoing Core Operations
and Raises 2008 EPS Outlook for Total Company Performance

-Positive Early Response to New Merchandise at Both Brands
HINGHAM, Mass.--(Business Wire)--
The Talbots, Inc. (NYSE:TLB) today announced results for the
second quarter ended August 2, 2008.

Reported (GAAP) Results

On a reported (GAAP) basis, net loss for the second quarter was
$25.0 million or $0.47 per share, compared to reported net loss of
$13.3 million or $0.25 per share for the second quarter ended August
4, 2007.

Results from Ongoing Core Operations

Second quarter net loss from ongoing core operations was $18.3
million or $0.34 per share, excluding a net loss of $4.4 million or
approximately $0.08 per share related to the operations of Talbots
Kids, Mens and U.K. non-core businesses, and excluding approximately
$2.3 million ($4.2 million pre-tax) or $0.04 per share in
restructuring charges associated with strategic initiatives related to
its ongoing core operations. This result compares to last year's net
loss of $0.18 per share on a comparable basis.

The Company believes that results from ongoing core operations are
a more meaningful measure of its performance, versus its non-core
operations which reflect businesses that will be closed in early
September. See the attached tables for a reconciliation of GAAP and
non-GAAP and comparison to prior year.

Second Quarter Highlights

-- Total Company inventory down 22% at end of second quarter;

-- Lean inventory position, improved IMU and strategic change to
monthly markdown cadence drive increase of 380 basis points in
Talbots brand second quarter merchandise gross margin from
ongoing core operations versus last year;

-- Total Company merchandise gross margin from ongoing core
operations improved 190 basis points over prior year;

-- Obtained $50 million unsecured subordinated term loan credit
facility from Aeon (U.S.A.), Inc., a wholly owned subsidiary
of Aeon Co., Ltd. and the majority shareholder of The Talbots
Inc., increasing the Company's total working capital borrowing
capacity to $215 million;

-- Completed closing of 30 Talbots Kids/Mens/U.K. stores, with
remaining 35 to be closed by mid-September. Close down costs
for these non-core operations much lower than expected;

-- Streamlined organization and reduced corporate staff by
approximately 9%, with annualized cost savings of
approximately $14 million;

-- On-track to reduce Company's cost structure by $100 million by
end of 2009, with $50 million in 2008;

-- July comparable store sales positive low single digits, with
strong sell-through on new product deliveries in August.

Results from Ongoing Core Operations/Non Core Operations

Trudy F. Sullivan, Talbots President and Chief Executive Officer,
commented, "This was a challenging quarter to drive top line sales,
predominantly due to the change in our Talbots brand annual June
clearance strategy, coupled with a difficult macro environment. While
a year-over-year shortfall in retail sales impacted the quarter,
results were largely offset by the Talbots brand merchandise gross
margin expansion. However, given the heavy inventory position of the
J. Jill brand, we took aggressive markdowns during the quarter, which
hurt gross margin and our second quarter total Company operating
performance. As a result, we began the fall season with an
appropriately lean inventory position."

"Also during the quarter, we made significant progress in all
activities related to the closing of Talbots Kids, Mens and U.K.
non-core businesses. As a result, we will complete the closing of
these businesses by mid-September at a greatly reduced cost versus our
original expectation. We currently anticipate that total close down
costs of these non-core businesses to be a net loss of $0.27 to $0.32
per share, compared to our original estimate for a net loss of $0.59
to $0.64 per share."

Sales Results

Total consolidated Company sales for the thirteen week period
ended August 2, 2008 were $528 million. By brand, retail store sales
were $352 million for Talbots compared to $392 million last year, and
$74 million for J. Jill compared to $80 million last year.

Consolidated direct marketing sales, including catalog and
Internet, for the thirteen-week period were $102 million, compared to
$100 million last year.

Total Company comparable store sales declined 12.0% for the
thirteen-week period. By brand, comparable store sales for Talbots and
J. Jill decreased 11.7% and 13.2% respectively.

Brand Commentary

Ms. Sullivan added, "We continued to see strong improvement in our
Talbots brand ongoing core operations merchandise gross margin, which
increased 380 basis points over the prior year, driven by a
combination of lean inventories, a monthly markdown cadence and
improved IMU. We cleared through the vast majority of our spring and
summer merchandise and have focused our attention on the fall selling
season."

"Looking ahead, we are encouraged by the significantly improved
sell-through rates we are seeing versus the prior year from our new
merchandise assortment across all channels."

"For the J. Jill brand, our aggressive markdown posture during the
quarter resulted in a steep decline of 540 basis points in the J. Jill
brand merchandise gross margin compared to the prior year, which
partially offset the improvement at the Talbots brand. Again, this
initiative was a necessary step towards leveling the inventory to
enable full price selling."

"With this critical step behind us, we were excited to receive
positive customer response to our product deliveries from our new J.
Jill creative team in July and an even greater response to the second
delivery in August. Poised with a new inventory management and
merchandise assortment plan, we are encouraged by the momentum that is
beginning to build in this brand."

OPERATING RESULTS FOR THE SIX-MONTH PERIOD

Reported (GAAP) Results

On a reported (GAAP) basis, net loss for the six months ended
August 2, 2008 was $23.4 million or $0.44 per share, compared to
reported net loss of $8.0 million or $0.15 per share for the same
period last year.

Results from Ongoing Core Operations

Net loss from ongoing core operations for the six months was $7.3
million or $0.14 per share, excluding a net loss of $10.3 million or
approximately $0.19 per share related to the operations of Talbots
Kids, Mens and U.K. non-core businesses, which are closing, and
excluding approximately $5.8 million ($9.4 million pre-tax) or $0.11
per share in restructuring charges associated with strategic
initiatives related to its ongoing core operations. This result
compares to last year's net loss of $2.1 million or $0.04 per share on
a comparable basis.

Sales Results

Total consolidated Company sales were $1,070 million for the first
half of the year. By brand, retail sales were $715 million for Talbots
compared to $779 million last year and $146 million for J. Jill
compared to $161 million last year. Consolidated direct marketing
sales for the six-month period were $209 million, including catalog
and Internet, compared to $206 million last year.

Total Company comparable store sales declined 10.9% for the
six-month period. By brand, comparable store sales for Talbots
decreased 9.5% and J. Jill's comparable store sales declined 16.8%.

FULL YEAR 2008 OUTLOOK

Ms. Sullivan concluded, "In line with our strategic plan, we have
put in place a number of new operating disciplines over the past
several months that we believe will benefit our Company over the long
term. While this is the first year of our turnaround, we have made
tremendous progress in streamlining our operations and properly
positioning the Company for future growth."

"Looking at the second half of the year, we understand the
challenges presented by the difficult macro-environment. Nevertheless,
we believe we can drive improved operating performance through a
combination of stronger merchandise, comprehensive and focused
marketing, customer prospecting and a continued emphasis on enhancing
our customers' overall shopping experience, while continuing to manage
expenses in a disciplined fashion. We have a great deal ahead of us,
however, we feel good about the positive signs we are seeing in our
business, and are reconfirming our outlook for earnings from ongoing
core operations for fiscal 2008, which for the back half is in line
with our historical performance of just a few years ago."

The Company is planning for consolidated comparable store sales
for the full fall season to be in the range of flat to slightly
negative compared to last year, with the Talbots brand approximately
flat and the J. Jill brand down low to mid single digits.

The Company has reconfirmed its previously announced outlook for
fiscal 2008 earnings from ongoing core operations, excluding Talbots
Kids, Mens and U.K. operating results and close down costs, to be
approximately in the range of $0.47 to $0.52 per diluted share.

The Company is planning for a net loss from non core operations in
the range of approximately $0.27 to $0.32 per share. This raises the
outlook for total Company earnings per share to be in the range of
approximately $0.15 to $0.25 versus the previous expectation for a net
loss per share in the range of $0.17 to $0.07 and compares to a net
loss of $3.56 per share reported in fiscal 2007.

Additional Disclosures

The Talbots, Inc. is in compliance with all covenants of its
acquisition term loan agreement for second quarter fiscal 2008.

Conference Call Details

As previously announced, Talbots will host a conference call
today, August 27, 2008 at 10:00 a.m. local time to discuss second
quarter 2008 results. To listen to the live call, please dial
866-336-2423, passcode "TLB" or log on to
www.thetalbotsinc.com/ir/ir.asp. The call will be archived on its web
site www.thetalbotsinc.com for a period of twelve months. In addition,
an audio replay of the call will be available shortly after its
conclusion and archived until August 29, 2008. This call may be
accessed by dialing (800) 642-1687; passcode 61366413.

The Talbots, Inc. is a leading specialty retailer and direct
marketer of women's apparel, shoes and accessories. The Company
currently operates stores in 867 locations in 47 states, the District
of Columbia, and Canada, with 590 locations under the Talbots brand
name and 277 locations under the J. Jill brand name. Both brands
target the age 35 plus customer population. Talbots brand on-line
shopping site is located at www.talbots.com and the J. Jill brand
on-line shopping site is located at www.jjill.com.

The foregoing contains forward-looking information within the
meaning of The Private Securities Litigation Reform Act of 1995. These
statements may be identified by such forward-looking terminology as
"expect," "achieve," "plan," "look," "believe," "anticipate,"
"outlook," "will," "would," "should," "guidance," or similar
statements or variations of such terms. All of the information
concerning our financial outlook (including future profitability,
future comparable stores sales, future earnings and other future
financial performance or operating measures), future credit
facilities, future merchandise purchases, future cash needs, and other
future financial performance or financial position constitutes
forward-looking information.

Our forward-looking statements are based on a series of
expectations, assumptions, estimates and projections about our Company
which involve substantial risks and uncertainty, including assumptions
and projections concerning our internal plan including our budget for
regular-price and markdown selling and operating cash flow for forward
periods. All of our forward-looking statements are as of the date of
this release only. The Company can give no assurance that such
expectations or forward-looking statements will prove to be correct.
Actual results may differ materially from our forward-looking
statements. The Company does not undertake or plan to update or revise
any such forward-looking statements to reflect actual results, changes
in plans, assumptions, estimates or projections, or other
circumstances occurring after the date of this release, even if such
results, changes or circumstances make it clear that any
forward-looking information will not be realized.

Any public statements or disclosures by us following this release
which modify or impact any of the forward-looking statements contained
in or accompanying this release will be deemed to modify or supersede
such statements in or accompanying this release.

Our forward-looking statements involve substantial known and
unknown risks and uncertainties as to future events which may or may
not occur, including the following risks: the impact of the continued
deterioration in the U.S. economic environment, including continued
negative impact on consumer discretionary spending, the disruption and
significant tightening in the U.S. credit and lending markets,
recessionary and inflationary pressures, high energy prices, and
declining value of the U.S. dollar; the success and customer
acceptance of our new merchandise offerings including our fall, winter
and other seasonal fashions and merchandise offerings; our ability to
accurately estimate and forecast future regular-price and markdown
selling and operating cash flow; achieving the Company's sales plan
for the balance of the year for each of the Talbots and J. Jill
brands; achieving the Company's operating cash flow plan for the year;
successfully executing the Company's strategic initiatives, including
anticipated lower inventory levels, expected operating expense and
other cost reductions, the success of the new promotional cadence for
the Talbots brand, reduced markdown exposure and improved gross
margins, the successful closing of the Talbots Kids and Talbots Mens
business concepts and closing of other underperforming stores;
continued ability to purchase merchandise on open account purchase
terms at expected levels; obtaining letter of credit facilities for
merchandise purchases from vendors who require such facilities; the
Company's ability to obtain any necessary increases in its credit
facilities as may be needed from time to time; the Company's ability
to reduce spending as needed; and the Company's ability to continue to
satisfy its financial covenants under its existing debt agreements. In
each case, actual results may differ materially from such
forward-looking information.

Certain other factors that may cause actual results to differ from
such forward-looking statements are included in the Company's periodic
reports filed with the Securities and Exchange Commission and
available on the Talbots website at www.thetalbotsinc.com under
"Investor Relations" and you are urged to carefully consider all such
factors.

-0-
*T
THE TALBOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED AUGUST 2, 2008 AND AUGUST
4, 2007
Amounts in thousands except per share data

Thirteen Weeks Ended Twenty-Six Weeks Ended
-------------------- -----------------------
August 2, August 4, August 2, August 4,
2008 2007 2008 2007
---------- --------- ----------- -----------

Net Sales $528,014 $572,331 $1,070,452 $1,145,887

Costs and Expenses

Cost of sales,
buying and
occupancy 378,011 409,013 714,904 768,628
Selling, general and
administrative 175,012 175,539 361,420 372,166
Restructuring
charges 9,324 - 20,432 -
Impairment of store
assets 220 - 1,163 -
---------- --------- ----------- -----------

Operating (Loss) Income (34,553) (12,221) (27,467) 5,093

Interest
Interest expense 4,975 8,681 10,789 18,332
Interest income 83 451 200 819
---------- --------- ----------- -----------

Interest Expense - net 4,892 8,230 10,589 17,513
---------- --------- ----------- -----------

Loss Before Taxes (39,445) (20,451) (38,056) (12,420)

Income Tax Benefit (14,437) (7,135) (14,690) (4,344)
---------- --------- ----------- -----------

Net Loss $(25,008) $(13,316) $ (23,366) $ (8,076)
========== ========= =========== ===========

Net Loss Per Share:

Basic $ (0.47) $ (0.25) $ (0.44) $ (0.15)
========== ========= =========== ===========

Diluted $ (0.47) $ (0.25) $ (0.44) $ (0.15)
========== ========= =========== ===========

Weighted Average Number
of Shares of
Common Stock Outstanding:

Basic 53,442 52,980 53,372 52,954
========== ========= =========== ===========

Diluted 53,442 52,980 53,372 52,954
========== ========= =========== ===========

Cash Dividends Paid Per
Share $ 0.13 $ 0.13 $ 0.26 $ 0.26
========== ========= =========== ===========
*T

-0-
*T
THE TALBOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AUGUST 2, 2008, FEBRUARY 2, 2008, AND AUGUST 4, 2007
Amounts in thousands

August 2, February 2, August 4,
2008 2008 2007
---------- ----------- ----------

Cash and cash equivalents $ 16,034 $ 25,476 $ 8,160
Customer accounts receivable - net 199,533 210,853 192,122
Merchandise inventories 259,908 329,104 332,340
Other current assets 100,320 86,414 82,636
---------- ----------- ----------
Total current assets 575,795 651,847 615,258

Property and equipment - net 452,565 486,733 508,812
Goodwill 113,490 113,490 247,490
Trademarks 139,384 139,384 154,984
Other intangible assets - net 75,906 80,980 86,273
Deferred income taxes 3,530 - -
Other assets 24,001 30,545 30,812
---------- ----------- ----------

TOTAL ASSETS $1,384,671 $1,502,979 $1,643,629
========== =========== ==========

Accounts payable $ 135,720 $ 171,830 $ 107,816
Accrued income taxes - 4,829 -
Accrued liabilities 163,899 185,735 142,357
Notes payable to banks 34,000 - 12,800
Current portion of long-term debt 116,705 80,650 80,632
---------- ----------- ----------
Total current liabilities 450,324 443,044 343,605

Long-term debt less current portion 232,000 308,377 348,705
Deferred rent under lease
commitments 147,720 144,569 135,090
Deferred income taxes 544 5,646 29,160
Other liabilities 141,118 146,564 160,197
Stockholders' equity 412,965 454,779 626,872
---------- ----------- ----------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,384,671 $1,502,979 $1,643,629
========== =========== ==========
*T

-0-
*T
THE TALBOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE TWENTY-SIX WEEKS ENDED AUGUST 2, 2008 AND AUGUST 4, 2007
Amounts in thousands

Twenty-Six Weeks Ended
----------------------
August 2, August 4,
2008 2007
------------ ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(23,366) $ (8,076)
Depreciation and amortization 67,839 65,910
Impairment of store assets 1,163 -
Deferred and other items (9,649) 4,198
Changes in:
Customer accounts receivable 11,282 12,593
Merchandise inventories 69,088 20,823
Accounts payable (35,890) (5,244)
Accrued income taxes (4,676) (1,863)
All other working capital (33,284) 6,597
------------ ---------
42,507 94,938
------------ ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (32,627) (37,439)
Proceeds from disposal of property and
equipment 2,549 -
------------ ---------
(30,078) (37,439)
------------ ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayments) from working capital
notes payable, net 34,000 (32,200)
Payments on long-term borrowings (40,248) (40,232)
Proceeds from options exercised 872 370
Excess tax benefit from options exercised 96 141
Payment of debt issuance costs (750) -
Cash dividends (14,366) (14,145)
Purchase of treasury stock (1,396) (519)
------------ ---------
(21,792) (86,585)
------------ ---------

EFFECT OF EXCHANGE RATE CHANGES ON CASH (79) 1,323

NET DECREASE IN CASH AND CASH EQUIVALENTS (9,442) (27,763)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 25,476 35,923
------------ ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,034 $ 8,160
============ =========
*T

-0-
*T
SEC Regulation G

THE TALBOTS, INC. AND SUBSIDIARIES
Reconciliation of GAAP Presentation to Ongoing Core Operations and
Non-Core Businesses
and Ongoing Core Operations Before Restructuring Charges Presentation
Amounts in thousands except per share data
(Unaudited)

GAAP Basis Non-GAAP
August 2, Non-GAAP August 2,
2008 Adjustments 2008
---------- ----------- ----------
(13 weeks) (13 weeks) (13 weeks)

Net Sales $528,014 $(19,845)(a) $508,169

Costs and Expenses
Cost of sales, buying
and occupancy 378,011 (17,389)(a) 360,622
Selling, general and
administrative 175,012 (4,285)(a) 170,727
Restructuring
charges: kids, mens,
U.K. 5,096 (5,096)(b) -
Restructuring
charges: other 4,228 (c) - 4,228
Impairment of store
assets 220 (d) - 220
---------- ----------- ----------

Operating Loss (34,553) 6,925 (27,628)

Interest
Interest expense 4,975 4,975
Interest income 83 83
---------- ----------

Interest Expense - net 4,892 4,892
---------- ----------

Loss Before Taxes (39,445)

Loss From Ongoing Core
Operations Before Taxes n/a (32,520)
Income Tax Benefit:
Ongoing Core Operations n/a (11,901)(e) (11,901)
----------
Net Loss From Ongoing Core
Operations n/a (20,619)

Net Loss Per Diluted Share
From Ongoing Core
Operations n/a $ (0.39)
==========

Loss From Non-core
Businesses Before Taxes n/a (6,925) (6,925)
Income Tax Benefit: Non-
core Businesses n/a (2,536)(e) (2,536)
----------- ----------
Loss From Non-core
Businesses n/a (4,389)

Net Loss Per Diluted Share
From Non-core Businesses n/a $ (0.08)
==========

Income Tax Benefit (14,437) 14,437 (e)
---------- -----------

Net Loss $(25,008) $ - $(25,008)
========== =========== ==========

Net Loss Per Share

Basic $ (0.47) $ (0.47)
========== ==========

Diluted $ (0.47) $ (0.47)
========== ==========

----------------------------------------------------------------------

Loss From Ongoing Core
Operations Before Taxes n/a (32,520)
Restructuring charges:
other n/a 4,228 (f)
----------
Loss From Ongoing Core
Operations Before Taxes
and Restructuring n/a (28,292)

Income Tax Benefit on
Ongoing Core Operations
Before Restructuring n/a (9,969)
----------
Net Loss From Ongoing Core
Operations Before
Restructuring n/a (18,323)

Net Loss Per Diluted Share
From Ongoing Core
Operations Before
Restructuring n/a $ (0.34)
==========

----------------------------------------------------------------------

Weighted Average Number of
Shares of
Common Stock Outstanding

Basic 53,442 53,442
========== ==========

Diluted 53,442 53,442
========== ==========

Cash Dividends Paid Per
Share $ 0.13 $ 0.13
========== ==========

GAAP Basis Non-GAAP
August 4, Non-GAAP August 4,
2007 Adjustments 2007
---------- ----------- ----------
(13 weeks) (13 weeks) (13 weeks)

Net Sales $572,331 $(21,214)(a) $551,117

Costs and Expenses
Cost of sales, buying and
occupancy 409,013 (20,863)(a) 388,150
Selling, general and
administrative 175,539 (6,820)(a) 168,719
Restructuring charges: kids,
mens, U.K. - - -
Restructuring charges: other - - -
Impairment of store assets - - -
---------- ----------- ----------

Operating Loss (12,221) 6,469 (5,752)

Interest
Interest expense 8,681 8,681
Interest income 451 451
---------- ----------

Interest Expense - net 8,230 8,230
---------- ----------

Loss Before Taxes (20,451)

Loss From Ongoing Core Operations
Before Taxes n/a (13,982)
Income Tax Benefit: Ongoing Core
Operations n/a (4,547)(e) (4,547)
----------
Net Loss From Ongoing Core
Operations n/a (9,435)

Net Loss Per Diluted Share From
Ongoing Core Operations n/a $ (0.18)
==========

Loss From Non-core Businesses
Before Taxes n/a (6,469) (6,469)
Income Tax Benefit: Non-core
Businesses n/a (2,588)(e) (2,588)
----------- ----------
Loss From Non-core Businesses n/a (3,881)

Net Loss Per Diluted Share From
Non-core Businesses n/a $ (0.07)
==========

Income Tax Benefit (7,135) 7,135 (e)
---------- -----------

Net Loss $(13,316) $ - $(13,316)
========== =========== ==========

Net Loss Per Share

Basic $ (0.25) $ (0.25)
========== ==========

Diluted $ (0.25) $ (0.25)
========== ==========

----------------------------------------------------------------------

Loss From Ongoing Core Operations
Before Taxes n/a (13,982)
Restructuring charges: other n/a -
----------
Loss From Ongoing Core Operations
Before Taxes and Restructuring n/a (13,982)

Income Tax Benefit on Ongoing
Core Operations Before
Restructuring n/a (4,547)
----------
Net Loss From Ongoing Core
Operations Before Restructuring n/a (9,435)

Net Loss Per Diluted Share From
Ongoing Core Operations Before
Restructuring n/a $ (0.18)
==========

----------------------------------------------------------------------

Weighted Average Number of Shares
of
Common Stock Outstanding

Basic 52,980 52,980
========== ==========

Diluted 52,980 52,980
========== ==========

Cash Dividends Paid Per Share $ 0.13 $ 0.13
========== ==========

*T

-0-
*T
(a) Adjusted to exclude results of kids, mens, and U.K. businesses.

(b) Adjusted to exclude restructuring charges related to kids, mens,
and U.K businesses. Restructuring charges primarily relate to
store leases and severance.

(c) Restructuring charges primarily relate to severance and
professional services related to the Company's strategic
initiatives and are part of the Company's ongoing core
operations.

(d) Impairment charge relates to the closure of under-performing core
business stores and is part of the Company's ongoing core
operations.

(e) The GAAP basis income tax expense has been allocated to the
Company's ongoing core operations and non-core businesses.

(f) Amount shown is on a pre-tax basis; after tax, amount would be
approximately $2.3 M.
*T

-0-
*T
SEC Regulation G

THE TALBOTS, INC. AND SUBSIDIARIES
Reconciliation of GAAP Presentation to Ongoing Core Operations and
Non-Core Businesses
and Ongoing Core Operations Before Restructuring Charges Presentation
Amounts in thousands except per share data
(Unaudited)

GAAP Basis Non-GAAP
August 2, Non-GAAP August 2,
2008 Adjustments 2008
----------- ----------- -----------
(26 weeks) (26 weeks) (26 weeks)

Net Sales $1,070,452 $(41,158)(a) $1,029,294

Costs and Expenses
Cost of sales,
buying and
occupancy 714,904 (35,525)(a) 679,379
Selling, general
and administrative 361,420 (11,343)(a) 350,077
Restructuring
charges: kids,
mens, U.K. 11,042 (11,042)(b) -
Restructuring
charges: other 9,390 (c) - 9,390
Impairment of store
assets 1,163 (d) - 1,163
----------- ----------- -----------

Operating (Loss) Income (27,467) 16,752 (10,715)

Interest
Interest expense 10,789 10,789
Interest income 200 200
----------- -----------

Interest Expense - net 10,589 10,589
----------- -----------

Loss Before Taxes (38,056)

Loss From Ongoing Core
Operations Before Taxes n/a (21,304)
Income Tax Benefit:
Ongoing Core Operations n/a (8,223)(e) (8,223)
-----------
Net Loss From Ongoing
Core Operations n/a (13,081)

Net Loss Per Diluted
Share From Ongoing Core
Operations n/a $ (0.25)
===========

Loss From Non-core
Businesses Before Taxes n/a (16,752) (16,752)
Income Tax Benefit: Non-
core Businesses n/a (6,467)(e) (6,467)
----------- -----------
Loss From Non-core
Businesses n/a (10,285)

Net Loss Per Diluted
Share From Non-core
Businesses n/a $ (0.19)
===========

Income Tax Benefit (14,690) 14,690 (e)
----------- -----------

Net Loss $ (23,366) $ - $ (23,366)
=========== =========== ===========

Net Loss Per Share

Basic $ (0.44) $ (0.44)
=========== ===========

Diluted $ (0.44) $ (0.44)
=========== ===========

----------------------------------------------------------------------

Loss From Ongoing Core
Operations Before Taxes n/a (21,304)
Restructuring charges:
other n/a 9,390 (f)
-----------
Loss From Ongoing Core
Operations Before Taxes
and Restructuring n/a (11,914)

Income Tax Benefit on
Ongoing Core Operations
Before Restructuring n/a (4,599)
-----------
Net Loss From Ongoing
Core Operations Before
Restructuring n/a (7,315)

Net Loss Per Diluted
Share From Ongoing Core
Operations Before
Restructuring n/a $ (0.14)
===========

----------------------------------------------------------------------

Weighted Average Number
of Shares of Common
Stock Outstanding

Basic 53,372 53,372
=========== ===========

Diluted 53,372 53,372
=========== ===========

Cash Dividends Paid Per
Share $ 0.26 $ 0.26
=========== ===========

GAAP Basis Non-GAAP
August 4, Non-GAAP August 4,
2007 Adjustments 2007
----------- ----------- -----------
(26 weeks) (26 weeks) (26 weeks)

Net Sales $1,145,887 $(45,836)(a) $1,100,051

Costs and Expenses
Cost of sales, buying and
occupancy 768,628 (41,243)(a) 727,385
Selling, general and
administrative 372,166 (14,476)(a) 357,690
Restructuring charges:
kids, mens, U.K. - - -
Restructuring charges:
other - - -
Impairment of store assets - - -
----------- ----------- -----------

Operating (Loss) Income 5,093 9,883 14,976

Interest
Interest expense 18,332 18,332
Interest income 819 819
----------- -----------

Interest Expense - net 17,513 17,513
----------- -----------

Loss Before Taxes (12,420)

Loss From Ongoing Core
Operations Before Taxes n/a (2,537)
Income Tax Benefit: Ongoing
Core Operations n/a (390)(e) (390)
-----------
Net Loss From Ongoing Core
Operations n/a (2,147)

Net Loss Per Diluted Share From
Ongoing Core Operations n/a $ (0.04)
===========

Loss From Non-core Businesses
Before Taxes n/a (9,883) (9,883)
Income Tax Benefit: Non-core
Businesses n/a (3,954)(e) (3,954)
----------- -----------
Loss From Non-core Businesses n/a (5,929)

Net Loss Per Diluted Share From
Non-core Businesses n/a $ (0.11)
===========

Income Tax Benefit (4,344) 4,344 (e)
----------- -----------

Net Loss $ (8,076) $ - $ (8,076)
=========== =========== ===========

Net Loss Per Share

Basic $ (0.15) $ (0.15)
=========== ===========

Diluted $ (0.15) $ (0.15)
=========== ===========

----------------------------------------------------------------------

Loss From Ongoing Core
Operations Before Taxes n/a (2,537)
Restructuring charges: other n/a -
-----------
Loss From Ongoing Core
Operations Before Taxes and
Restructuring n/a (2,537)

Income Tax Benefit on Ongoing
Core Operations Before
Restructuring n/a (390)
-----------
Net Loss From Ongoing Core
Operations Before
Restructuring n/a (2,147)

Net Loss Per Diluted Share From
Ongoing Core Operations Before
Restructuring n/a $ (0.04)
===========

----------------------------------------------------------------------

Weighted Average Number of
Shares of Common Stock
Outstanding

Basic 52,954 52,954
=========== ===========

Diluted 52,954 52,954
=========== ===========

Cash Dividends Paid Per Share $ 0.26 $ 0.26
=========== ===========

*T

-0-
*T
(a) Adjusted to exclude results of kids, mens, and U.K. businesses.

(b) Adjusted to exclude restructuring charges related to kids, mens,
and U.K. businesses. Restructuring charges primarily relate to
store leases and severance.

(c) Restructuring charges primarily relate to severance and
professional services related to the Company's strategic
initiatives and are part of the Company's ongoing core
operations.

(d) Impairment charge relates to the closure of under-performing core
business stores and is part of the Company's ongoing core
operations.

(e) The GAAP basis income tax expense has been allocated to the
Company's ongoing core operations and non-core businesses.

(f) Amount shown is on a pre-tax basis; after tax, amount would be
approximately $5.8 M.
*T

-0-
*T
SEC Regulation G

THE TALBOTS, INC. AND SUBSIDIARIES
Reconciliation of GAAP Presentation Net Income to Non-GAAP Net Income
from Ongoing Core Operations
(Unaudited)

Outlook Actual
January 31, February 2,
2009 2008
------------- -----------
(52 weeks) (52 weeks)

Net income (loss) per share on a GAAP basis $0.15 - $0.25 ($3.56)
Impact of the impairment of J. Jill
intangibles - 2.71
Losses and costs related to the closing of
the Talbots Kids, Mens, and U.K. non-core
businesses 0.32 - 0.27 0.24
------------- -----------
Net income (loss) per share from ongoing
core operations on a non-GAAP basis $0.47 - $0.52 ($0.61)
============= ===========
*T

-0-
*T
THE TALBOTS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Presentation of Gross Margin
Statistics
(Unaudited)

GAAP Basis:
Ongoing Non-GAAP
Core Basis:
Operations Ongoing
and Core
Non-core Non-Core Operations
Businesses Operations Only
----------- ----------- -----------
Talbots brand Q2 2008 merchandise 290 basis (90 basis 380 basis
gross margin improvement points points) points
(decline) over Q2 2007

Total company Q2 2008 merchandise 130 basis (60 basis 190 basis
gross margin improvement points points) points
(decline) over Q2 2007
*T

The Talbots, Inc.
Julie Lorigan, 781-741-7775
Senior Vice President, Investor and Media Relations
or
Berns Communications Group
Stacy Berns/Melissa Jaffin, 212-994-4660
Investor/Media Relations

Copyright Business Wire 2008