By  on June 18, 2007

With its mullioned bay windows and cottage-like, white brick facade, the first Talbots store in Acton, Mass., was for years one of the retailer's top performers.

Opened in 1975, store number eight — as it is known internally — enjoyed such a rapport with its preppy suburban customers that executives were hesitant to move or expand it, despite evidence a bigger box could produce a great deal more.

"I can't tell you how many design reviews we had on that store and how long we looked at every option" to expand or relocate, said Michele Mandell, executive vice president of stores for Talbots Inc. and a 24-year company veteran. "We didn't have the right option and were very worried about not disrupting the relationship with the customer by moving the store too far."

They waited more than five years before the right opportunity arose: a new lifestyle center a few miles away that would allow the retailer to open four concepts — Talbots Misses, Woman, Kids and Petites — to create a "superstore" destination. The complex opened in 2003 and remains one of the most successful in the 1,135-store chain.

"We are," Mandell said, "a very methodical company."

She would not specify Acton's revenues, but said Talbots' best stores generate "well in excess" of $10 million annually.

Both continuity and evolution are necessary in retail. In its 60-year history, Talbots has demonstrated both.

They've kept one of the brand's signatures from the earliest days, the red door that graced a 17th-century white clapboard house purchased by founders Nancy and Rudolf Talbot in the seaside town of Hingham, Mass. That red door — in a custom color created for the company by Benjamin Moore — has become the signature of six of seven brand expansion concepts (see Talbots at a Glance on page 8).

There's change, too. The company that turned a quaint house into retail iconography now chooses lifestyle centers, where it can cluster a row of its own stores, as its preferred location. Nearly half of its stores, 44 percent, are in such specialty centers, and 39 percent are in malls. The best Talbots Kids stores are in regional malls, where a stroller can be easily maneuvered. Talbots woman, the plus-size concept, is the fastest-growing business under the brand umbrella.In 1984 Mandell was working as a store manager at a Talbots in Pittsburgh when she received a sheet cake celebrating the company's first $100 million in sales. They had 38 stores and a catalogue. Now Talbots units generate $1.6 billion in sales, and Mandell runs the whole shebang.

Most of what they've tried has worked well, but not everything. They shuttered an intimates concept in 1997 and pressed pause on expansions of their Mens, Kids and Collection stand-alone stores while they digest the J. Jill acquisition.

There have been recent hiccups in the flagship misses' business which, with Petites, brings in about $1.3 billion annually, or some 79 percent of total Talbots brand sales in direct and retail channels.

Last year, product gross margin deteriorated by 130 basis points, net income as a percentage of sales fell from 5.2 percent to 1.4 percent, and comparable-store sales rose only 1.3 percent, dragged down by fourth-quarter stumbles in the flagship division.

They've charted a retail recovery strategy hinged on adding 30 percent more stockkeeping units over the next two years, adding an additional sale in February and emphasizing outfit dressing.

"The increased sku count is paying off," said chief financial officer Ed Larsen.

The challenge will be to boost productivity through additional sku's without taking on inventory or making the stores cluttered.

A serene, well-organized shopping experience, in fact, has been one of the hallmarks of Talbots' stores. Remarkably quiet, the stores (each laid out a bit differently) feel like a modernized English country house, zapped of frill and pomp, but with its classic architectural bones remaining (columns, paneling, beveled glass, nesting tables and black-and-white houndstooth armchairs). The walls are white and there's a lot of glass at the entryway, both of which help showcase the colorful clothes that are a brand hallmark.

Mandell gives her managers packets full of information on merchandise and suggested layouts, but encourages them to customize the presentation for their store and their customer base.

"We invest a lot in our managers," said Mandell. "When we hire a manager, we are looking for someone who would be at a [divisional] level at another company."In an industry with high turnover rates, Talbots has made loyalty part of company culture. Mandell, who sports fingernails polished in Talbots red, uses thousands of hours of air time (and even car time, when her husband is at the wheel) to deliver stacks of hand-written thank-you notes to store associates who have received positive feedback from a customer.

And here's her favorite stat: Last year she mailed 45,000 compliments.

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