NEW YORK — Still digesting its J. Jill acquisition, Talbots Inc. reported first-quarter earnings Wednesday fell 21 percent on a 1.5 percent sales gain.
The Hingham, Mass., specialty retailer also said second-quarter results would be below Wall Street estimates. Management said earnings per share would likely reflect "the impact of J. Jill's weak second-quarter sales, which will result in a significant loss in the period and represents a continuation of their first-quarter trends."
For the first quarter ended April 29, Talbots' net income dropped to $27.4 million, or 51 cents a share, from $34.5 million, or 63 cents, in the prior year on sales that climbed to $453 million from $446.5 million.
Arnold B. Zetcher, chairman, president and chief executive officer, said in a statement that earnings per share were "in line with our recently updated outlook and the First Call consensus estimate. Total company comparable-store sales increased modestly in the period and our direct marketing business, including catalogue and Internet, was approximately even with last year.
"Sales trends in our Talbots Woman large-size concept continued to be very strong throughout the entire quarter, with comparable-store sales rising 10 percent," Zetcher added. "In addition, our Talbots Kids performance was healthy, with a combined March/April comp-store gain of 9 percent."
The company is "still in the early stages of our integration [of J. Jill], and has entered into a period of significant change," he said. "Given this, it is very difficult to predict our second-quarter earnings due to a number of unusual factors, including costs associated with the acquisition of J. Jill, purchase-related accounting adjustments, as well as the learning curve for both organizations."
Still, the retailer said it was looking to post a loss in the second quarter of between 5 and 15 cents. The estimate includes "acquisition-related costs and adjustments" of about 20 cents per share, Zetcher said. Excluding the estimated charges as well as stock option expenses, earnings would be in the range of 8 to 18 cents, which compares with 35 cents in the second quarter of the prior year. Wall Street analysts have the retailer pegged to earn 35 cents in the second quarter.
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