Shares of The Talbots Inc. tumbled more than 40 percent Tuesday when its return to profitability in the first quarter was far overshadowed by large declines in sales and margins and a bleak outlook for the second quarter.
Trudy Sullivan, president and chief executive officer, said, “Our first-quarter performance reflects an inconsistent customer response to our merchandise assortments, a challenging competitive environment and high levels of promotional activity.” Without providing specific earnings guidance, the company said sales and traffic have continued to “trend negative” so far in the second quarter, when it expects continuing high levels of promotion and markdown activity. Quarter-to-date sales are down in the low teens, according to Michael Scarpa, chief financial officer and chief operating officer.
For the three months ended April 30, income was $739,000, or 1 cent a diluted share, versus a loss of $4.4 million, or 8 cents, last year. On an adjusted basis, first-quarter income from continuing operations was $900,000, or 1 cent a diluted share, 2 cents below analysts’ consensus estimate of 3 cents and against a year-ago loss of $7.1 million, or 12 cents.
Sales for the quarter fell 6 percent to $301.3 million from $320.7 million. Same-store sales fell 8.2 percent and comparable sales declined 7.7 percent. Comparable sales include revenues from the Internet, catalogues and red-line orders from inside stores.
Gross margin contracted 610 basis points to 37.5 percent of sales from 43.6 percent. Merchandise margin fell 880 basis points because of higher levels of markdowns and promotional activity.
Shares ended the day at $2.63, down $1.79, or 40.5 percent, with volume of 38.1 million, more than 11 times the daily average.
Emphasizing that second-quarter conditions “will continue to be challenging,” Sullivan outlined changes made to improve results starting with the fall. “Our sweater assortment has been modified to include new styles, adding more novelty and variety to the mix,” she told analysts on the company’s conference call. “In knits, we have increased the penetration of print, pattern and addressed fabric weights. And we have added breadth to some of our smaller categories including dresses, skirts, suiting and woven tops, where we have seen increased customer demand.”
In general, the merchandise mix for the second half of the year will have a “stronger balance of classic versus fashion-forward styles.” She also told analysts that the company plans to “increase customer contact through catalogue circulation, mailers and postcards, as well as testing new alternate forms of media as we continue with new customer acquisition efforts.”
The company previously revealed plans to close between 90 to 100 stores and consolidate or downsize 15 to 20 others.
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)
The @cfda has shifted the dates of #NYFW, with Men’s showing on February 5 through February 7, and Women’s will directly follow, running from February 8 through 14. The preliminary schedule will be released on the CFDA’s web site in the next few days, but Mark Beckham, VP of marketing for the CFDA, revealed that @rafsimons will be back to close the men’s-specific part of the week with a show on February 7 #wwdfashion (📷: Kelly Taub)
@ferragamo is introducing a new space dedicated to the development of women’s and men’s leather good samples. The laboratory, which is created eco-friendly materials and designed to reduce the environmental impact of the manufacturing processes, will allow the company to expand its accessories offering through traditional artisanal approaches. #wwdfashion (📷: @aitorrosasphoto)
How does a “regular, degular, schmegular” girl from the Bronx, N.Y., become a Grammy-nominated artist with a certified platinum record in less than a year? Call it the @iamcardib come up. The 25-year-old has become a musical sensation, and the fashion world is taking note. “If I could describe her style I would say drama. She’s really into the dramatics,” says Cardi B’s stylist @kollincarter. See how Carter styles her bold and out there looks with the link in bio. #wwdfashion
“There is no formula. There is no guideline. I can watch Ted Talks all day, but there is no one who can advise me on exactly what it is I should be doing,” said @ronniefieg, CEO of @kith, in an interview with WWD’s @ariahughes at the brand’s new SoHo office in Manhattan. Head to WWD.com to see how Fieg went from hanging out in shoe stockrooms at 13 to building his own business. #wwdfashion (📷: @weston.wells)
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion