The Talbots Inc. on Monday posted sharp fourth-quarter declines, including a net loss of $366.5 million and a comp-store sales drop of 24.6 percent.
While the figures indicate turnaround efforts still have a long way to go, the retailer was able to soften the bad news somewhat by revealing progress on several fronts, including signing a nonbinding letter of intent with Li & Fung Ltd. to possibly become Talbots’ primary global sourcing agent. Talbots works with other sourcing companies and has its own sourcing arm, but a pact with Li & Fung would streamline sourcing efforts and free up the retailer to concentrate more on product design.
On efforts to sell the J. Jill division, “There are several interested parties diligently at work. We continue to move forward,” said Trudy Sullivan, Talbots’ president and chief executive officer, during a conference call. She did not identify the parties.
And the company disclosed that Aeon Co. Ltd., the firm’s majority shareholder, has provided a new $150 million secured revolving loan facility to be used for general corporate and working capital purposes, including vendor payments. It supplements the existing $215 million committed to working capital facilities.
On the results overall, Sullivan commented: “It was a challenging year to say the least, but we are proud of what we accomplished in a very challenging macro environment. We are still in the early stages of transforming our brand and improving our operating performance, but we are encouraged.”
She believes Talbots has made progress in modernizing the merchandise under the internal platform of “tradition transformed” even if the numbers are down, and cited company research indicating “consumer intent to purchase showed an increase last fall for the first time since 2004. When the world rights itself, we will emerge as a stronger brand.” She also said consumers are writing in, telling Talbots to hang in until the economy turns and that they will be there to spend. “All channels are now in sync with a consistent brand message to the customer….Customers are spending less, but not shifting what they spend to other retailers as much as before,” said Sullivan.
In addition to merchandise improvements, which several analysts acknowledged during the call, Sullivan said the company is “particularly focused on our measures to improve liquidity and cut expenses.” The $366.5 million, or $6.85 a diluted share, loss in the quarter compared with a loss of $171.4 million, or $3.22 a share, in the year-ago period.
The net loss for continuing operations was $136.3 million, or $2.55 a share, compared with a loss of $10.3 million, or 19 cents a share, in last year’s quarter. Excluding nonrecurring items, the net loss for continuing operations was $128.4 million, or $2.40, up from a loss of $7.1 million, or 13 cents a share, in the 2007 quarter.
Revenue contracted 23.3 percent to $327.9 million, versus $427.7 million a year earlier.
For the full year, Talbots’ net loss expanded to $560.7 million, or $10.49 a share, versus $188.9 million, or $3.56, last year. Excluding discontinued operations, the loss was $144.5 million, or $2.70 a share, versus net income of $43 million, or breakeven on an earnings per share basis.
Net sales slid 12.5 percent, to $1.5 billion from $1.71 billion, and same-store sales were off 14.2 percent.
Due to the “substantial volatility and continued uncertainty in the U.S. economic conditions,” Talbots said it would not provide fiscal 2009 guidance. However, the company did forecast a first-quarter loss from continuing operations of between 47 and 52 cents a share.
Prior to the release of Monday’s fourth-quarter results, the retailer’s stock closed at $4.57, up 16.9 percent.
In the past year, the company also refinanced a $200 million term loan to a semiannual interest-only loan with Aeon Co. Ltd., maturing in 2012, and paid off the J. Jill acquisition debt in full and significantly reduced payroll and benefits.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews