Talbots adjusted loss beats forecasts; stock soars

NEW YORK (Reuters) - Talbots Inc (TLB.N: Quote, Profile, Research, Stock Buzz) posted a quarterly loss on Wednesday but the results on an adjusted basis and fiscal year outlook were better than analysts were expecting, sending its shares surging 17 percent.

The women's apparel company, which operates the Talbots and J. Jill brands, reported a fourth-quarter net loss of $171 million, or $3.23 per share, compared with a year-earlier profit of $17,000, or nil per share.

Excluding charges from the write-down of assets, store closure charges, acquisition and financing costs, executive compensation charges and other items, the company lost 22 cents per share. Analysts on average had been expecting an adjusted loss of 25 cents per share, according to Reuters Estimates.

Fourth-quarter sales totaled $587 million versus analysts' forecasts of $602.25 million.

"This is a company in dire straits working hard to extricate themselves and improve their situation," said Richard Jaffe, analyst at Stifel Nicolaus in New York. "The good news is they seem to be running a more disciplined business. They're more in control of inventory."

Talbots said it sees fiscal-year 2008 earnings of 47 cents to 52 cents per share. Analysts forecast a fiscal year loss of 2 cents on $2.3 billion in revenue.

Talbots said it will take a larger-than-expected $144 million fourth-quarter charge, or $2.71 per share, to write down assets related to J. Jill. It cited weaker-than-expected growth and earnings from the brand for the write-down. It has not yet determined how much it might eventually write off.

The J. Jill write-down "underscores that that piece of the business is in worse shape than anyone thought," Jaffe said.

Talbots in October said it was conducting a strategic review to turn around its business. Since then, shares of the company have fallen more than 30 percent.