Just a day after saying it had an agreement in place to rid itself of the problematic J. Jill brand, The Talbots Inc. Tuesday continued to pare down its operations by reducing the workforce in its Hingham, Mass., headquarters.
As it posted weaker first-quarter results, the firm said it would reduce its corporate head count by 20 percent to move closer to its goal of $150 million in expense savings. As of April, the retailer had identified $100 million in annualized cost reductions and now has pinpointed another $25 million in reductions on its way to the final goal of $150 million.
The company said its headquarters head count is 1,610, which would put the job losses at about 322.
For the 13 weeks ended May 2, the net loss was $23.6 million, or 44 cents a share, against income of $1.6 million, or 3 cents, in the comparable three months a year ago. Excluding discontinued operations but including restructuring and impairment charges, the loss per share was 35 cents, 14 cents better than analysts expected.
Sales dropped 26.2 percent to $306.2 million from $414.8 million. Retail sales declined 25.7 percent to $256.4 million from $345.1 million, while comparable-store sales fell 26.9 percent. Direct marketing sales decreased 28.6 percent to $49.8 million from $69.7 million.
The head count reduction includes the elimination of open positions and is expected to produce annualized savings of $21 million. Expenses associated with the reduction, mostly for severance and related benefits, were $5.4 million and were included first-quarter restructuring charges.
The news of the head count reduction came a day after the women’s specialty chain said it had agreed to sell its J. Jill brand to an affiliate of Golden Gate Capital for $75 million with a closing expected during the current second quarter. Talbots will retain 75 of the stores with plans to close them within two months.
“The reaction to our merchandise and our catalogue presentation continues to be more positive than a year ago,” said Trudy F. Sullivan, president and chief executive officer, in a conference call with Wall Street analysts.
She noted the company did have some issues with its color assortment early in the quarter, but has since readjusted the merchandise mix, selling more pink and blue that have been better received by customers.
She noted a “substantial rebound” in merchandise margin from the fourth quarter and a 21 percent reduction in inventory per square foot over the comparable 2008 period.
New to the chain is the Talbots Upscale Outlet concept, a growth initiative unveiled in April 2008. Eight concept stores opened in May, and the company expects to open a total of 12 sites this year. The opening price points are 30 to 40 percent below those of the core Talbots chain.
In addition, the company said it hopes to reach an agreement with Li & Fung Ltd. by September. The global sourcing agreement, if reached, would enable Talbots to improve its speed-to-market as well as streamline its cost structure, Sullivan told analysts.
Excluding restructuring and impairment charges, the women’s specialty retailer expects a loss of between 50 cents and 58 cents during the second quarter.
Shares ended the day at $5.01, up 1 cent, or 0.2 percent.