* Q2 adjusted loss 33 cents/shr; Street view loss 52 cents
* Says improved trends continuing into September
* Sees Q3 loss from continuing ops 24-30 cents/shr
* Shares down 2.8 percent after rising nearly 10 pct
(Adds CEO comment, updates shares)
By Jessica Wohl
CHICAGO, Sept 9 Talbots Inc TLB.N posted a
narrower-than-expected second-quarter loss and gave a
third-quarter outlook that beat Wall Street forecasts,
signaling that the retailer's cost cuts and improved
merchandising were paying off.
But Talbots' Chief Executive Trudy Sullivan cautioned on a
conference call with analysts, "We are not projecting a
sustainable turn in our sales trends as the economic
environment remains uncertain." Talbots' shares fell 2.8
percent after rising as much as 10 percent after the results
Talbots, which has been cutting staff and streamlining
operations as it tries to bring back shoppers over the age of
35, said it was encouraged by customers' response to its fall
While Talbots still expects sales to drop in the current
third quarter, it said the decline should not be as steep as in
the first two quarters of the year.
Second-quarter sales were mainly driven by items under
$100, and novel items sold well, Talbots said.
UBS analyst Roxanne Meyer said it appeared customers were
responding positively to new products, which she said looked
Talbots, which sells traditional styles to women and is
majority-owned by Japan's Aeon Co Ltd (8267.T), is aiming to
reduce expenses by $150 million a year. It now expects to
realize $135 million in cost cuts this year, up from a prior
target of $125 million.
Talbots' shares were down 21 cents to $6.90 around midday.
Talbots posted a net loss of $24.5 million, or a loss of 45
cents per share, for the quarter ended August 1, compared with
a net loss of $25 million, or 47 cents, a year earlier.
Excluding restructuring and impairment charges, the loss
was 33 cents per share. On that basis, analysts, on average,
had forecast a loss of 52 cents per share. Talbots had forecast
a loss of 50 cents to 58 cents per share.
Sales from continuing operations fell 23 percent to $304.6
million. Sales at stores open at least a year plunged 24.9
Talbots said its deal with global sourcing agent Li & Fung
Ltd (0494.HK) was on track to be completed by mid-September. Li
& Fung will become the exclusive sourcing agent for nearly all
Talbots apparel, which should help Talbots simplify its supply
chain, cut costs and bring items to market faster. Rivals like
Liz Claiborne Inc LIZ.N have similar deals with Li & Fung.
Talbots competes with retailers like Coldwater Creek Inc
CWTR.O and Chico's FAS Inc (CHS.N), which sell apparel to
mature women. Like many retailers, their sales have been
affected by a decrease in consumer spending.
For the third quarter, Talbots said it expects an adjusted
loss from continuing operations of 24 cents to 30 cents per
share. Analysts, on average, have forecast a loss of 31 cents
per share. Talbots expects sales to fall 14 percent to 17
percent. Analysts, on average, have forecast a 15 percent
This summer, Talbots completed the sale of its J. Jill
brand to Golden Gate Capital for about $75 million. It paid
$517 million for the women's fashion chain three years
(Reporting by Jessica Wohl, additional reporting by Alexandria
Sage in San Francisco; editing by John Wallace, Dave