The Talbots Inc. reached a deal for $200 million in financing and said it would eliminate roughly 370 jobs, or 17 percent of its corporate-level workforce, as well as close about 20 stores.
The company also disclosed that sales in the fourth quarter ended Jan. 31 fell 23.4 percent to $328 million from $428 million a year ago.
The 869-door retailer, which is trying to cut $150 million in expenses, said its majority shareholder, Aeon Co. Ltd., committed to give it the $200 million unsecured term loan facility. The loan is expected to be completed during the first quarter. Talbots will use the money to pay off debt associated with its 2006 acquisition of J. Jill Group Inc., which the firm is now trying to sell.
Matching payments to workers’ 401(k) retirement plans also were cut and employees will have to contribute more to their health-care plans.
Talbots joins a growing list of retailers that have recently issued pink slips to employees, including Target Corp., The Bon-Ton Stores Inc., Eddie Bauer Holdings Inc. and Chico’s FAS Inc. The company’s stock price rose 7 cents, or 3.3 percent, to close at $2.18, on Thursday.
“The ongoing impact of the global economic crisis on our business demands that we take further immediate and decisive action to drive greater efficiencies throughout our organization,” said Trudy Sullivan, president and chief executive officer.
The new loan comes in addition to the firm’s current working capital borrowing capacity of $215 million, of which $200 million has been committed. Talbots said Aeon also expects to provide guarantees for the retailer’s other bank debt.
Talbots also cut its planned 2009 capital expenditures, net of construction allowances, to about $23 million, from projected 2008 spending of $43 million, on a comparable basis.