By  on December 17, 2007

Talbots Inc. and its timeless classics are about to get a desperately needed product and marketing fix.

The plan is to make the quintessential Baby Boomer brand "less safe, sexier and fun," and have the changes fully visible to customers by the second half of next year, Trudy F. Sullivan, president and chief executive officer, disclosed in an exclusive interview Friday.

"It boils down to great product. I think if we really addressed this product issue hard and fast, Talbots is almost unstoppable," said Sullivan.

The customer remains loyal, the brand is well known, and the operations at the $2.2 billion specialty retailer, including $1.9 billion in Talbots sales and $350 million from J. Jill last year, are intact. Yet, for several seasons, the company struggled to overcome dowdy offerings and an outdated conservative New England image. The 60-year-old brand just hasn't lived up to its slogan touting "modern classic styles in apparel, shoes and accessories, providing head-to-toe wardrobing for all occasions."

In the third quarter, the company lost $9.4 million and comparable-store sales decreased 8.2 percent at Talbots and 6.5 percent at J. Jill. In 2006, net income fell to $31.6 million from $93.2 million the year before. Aside from the tepid consumer response to the offerings, there have been costs stemming from the J. Jill acquisition last year and the general malaise that seems to be plaguing much of the sector, with Ann Taylor, Chico's, Dress Barn and other misses' businesses experiencing a downturn.

Behind the scenes at Talbots, there have been sweeping changes in the organization and its operations — all within the 90 days that Sullivan has led the business. The leadership team has been virtually overhauled; the Publicis advertising agency was hired to elevate the image; the delivery schedule changed to refresh the stores with new receipts more regularly; markdowns are more frequent in a shift from four to six big sales, and the company has been aggressive, reaching out to customers via e-mail, direct mail and incentives. A "friends and family" promotion was held last month for the first time, and "bouncebacks," where shoppers get a percent off based on how much they spend, are offered.In addition, the company engaged a consulting firm to assist in a strategic review, which is 50 percent completed and should be 100 percent done in the first quarter of next year. The potential for store growth, productivity gains and noncore concepts such as the underdeveloped Talbots kids and men's wear divisions are being examined. The core women's business (misses', petites and large sizes) comprise about 80 percent of the chain's volume.

By early next year, a new general merchandise manager over women's apparel for inventory planning at Talbots will be named, as will as a new president for J. Jill.

Also on the executive front, Philip Kowalczyk, the former J. Jill president, was named Talbots Inc. chief operating officer in November, and last week at the Talbots brand, there were three key appointments. Basha Cohen was named executive vice president and chief merchandising officer; Michael Smaldone became chief creative officer, a new position, and Jeannie Barsam was named senior vice president, merchandise planning and analysis.

The additions have eased concerns about whether or not the Hingham, Mass.-based chain could still attract talent after its prolonged slump. "It's been the most frequently asked question from the investor community," Sullivan said. "Can we attract top talent? The answer is solidly yes."

Asked when consumers will notice real style changes in the stores, Sullivan replied: "That's the $64,000 question. We have to give Basha and Michael a runway until the back half of '08." In the meantime, "they can also help us execute what we own better," including improving floor sets and visuals.

The new hires, Sullivan said, are "seasoned executives who see the potential of what can happen at Talbots and want to be in on the ground level. They love the target consumer, the fact that Talbots is a fully vertical play and that it has stores and a direct business so we have control over the brand. All the ingredients are here — a great consumer, a venerable brand and great channels....Talbots will really be a design-driven brand, with a fully established and functioning design capability."

Smaldone is considered the creative guru of Talbots, influencing the brand image and ensuring it's consistent across the merchandise, catalogues, store design, Internet and anything else that touches the consumer. "He'll have firm control on the creative expression of the brand, right down to the boxes and the shopping bags," Sullivan said.Cohen will run the product development team in New York and the Hingham-based merchant group, effectively serving as chief merchant.

"We are not repositioning the Talbots brand," Sullivan explained. "It's about overhauling the execution of the Talbots brand. It's really about refreshing and reinvigorating. We are not going to take Talbots and make it contemporary, but we do want it to be a lot more fun and have a lot more energy. The product has disappointed. We have been too safe.

"Women still absolutely love this brand and want to buy more," she continued. "We have to make it irresistible. We have to kick it up several notches, to get her reengaged in a more significant way. We're lucky we have a very loyal customer."

Though sexy and fun has been added to the Talbots vernacular, Sullivan stressed that the brand shouldn't be trendy, yet can be enlivened by infusing Talbots icons — the twinsets, pearls, navy blazers, pants and ballet flats — with color, novelty and more frequent product flows. "Classic doesn't have to mean staid and boring. Classic means timeless," Sullivan said.

Talbots has suffered most with its casual offerings, as opposed to its more refined looks.

Women's fashion, Sullivan acknowledged, is currently far more exciting at places appealing to younger customers, such as Abercrombie & Fitch, J. Crew and H&M, which have demonstrated an ability to adapt to changing times but don't directly compete with Talbots and its generally older audience and fit for women ages 35 and up. Talbots considers its most direct competition to be Macy's, Nordstrom, Saks Fifth Avenue, Chico's and Ann Taylor.

The biggest change at Talbots might just be its willingness to change. When she first joined the retailer, "I really thought I would find institutional resistance to change," Sullivan said. "There is an organization here that's open to doing things differently, who have tremendous pride in the brand and aren't pleased with the performance. I've been pleasantly surprised at that."

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