NEW YORK — Choosing caution over risk, The Talbots Inc. Wednesday posted higher third-quarter earnings despite lower comparable-store sales.
Income for the three months ended Nov. 2 was up 2 percent to $37.4 million, or 63 cents a diluted share, from $36.6 million, or 58 cents, in the year-ago quarter. Sales rose 2 percent to $401.8 million versus $393.9 million. Retail sales gained 4 percent to $339.7 million from $325.7 million, despite a same-store sales decline of 3.2 percent. Catalog sales fell 9 percent to $62.1 million from $68.2 million.
Arnold B. Zetcher, chairman, president and chief executive officer, noted in a statement that the 3.2 percent comp decline was better than the negative mid-single-digit decrease anticipated. "Behind this improvement was a significant increase in our regular-price sales, as we ended the quarter with a 1.7 percent comparable-store gain in October," he explained.
During a conference call, executives said sales of casual merchandise — driven by high demand for wrinkle-free blouses and other easy-care products — were healthy, while demand for jackets was weak. Overall, Talbots Woman and Petites are performing above the core Misses business. The company in the quarter kept inventory levels lean, focusing on replenishing key items as needed.
Zetcher said the firm plannedin-store marketing events, such as a 15 percent discount to its best customers and an in-store sweater promotion set for next month. He noted that sales from the initial fall catalog mailing were weak, but stronger in the remailing, suggesting that consumers were "buying closer to need."
Richard Jaffe, analyst at UBS Warburg, wrote in a research note that the company began posting strong sweater sales in October. That should bode well for the holiday season, he wrote, since the category accounts for 23 percent of sales.
Three new Talbots Men concept stores are slated to open in spring 2003, with three more in the fall. The first three to be opened are at Main Street in Westport, Conn; Worthington Square in Worthington, Ohio, and King of Prussia Mall in Philadelphia. Sweaters have sold well in the men’s stores, and the average sale of $198 exceeds the $189 average in the Misses business.In the quarter, the firm opened 29 new stores and closed one, bringing the quarter-ending count to 874. The company said it will open 97 new stores in 2003, up from the originally planned opening of 92. Six will be closed.
The company stuck with its fourth-quarter earnings-per-share estimate of between 48 cents and 53 cents. Comps are expected down in the mid-single digits.
For the nine months, income fell 2 percent to $92.4 million, or $1.52 a diluted share, from $94.5 million, or $1.48, a year ago. Sales dipped 1 percent to $1.16 billion versus $1.18 billion. Retail sales were up slightly to $984.4 million from $983.3 million, with same-store sales falling 6.9 percent. Catalog sales dropped 9 percent to $179.1 million from $196 million.
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