TALBOTS NET ROCKETS 88.5%
Byline: Thomas Cunningham
NEW YORK — Shares of Talbots shot up 15 percent Wednesday after the company released better than expected fourth-quarter earnings and said its March sales were running ahead of plan.
Talbots’ earnings for the quarter ended Jan. 29 jumped 88.5 percent to $15.3 million, or 48 cents a diluted share, from $8.1 million, or 26 cents, in the year-ago period. The per-share results were 2 cents ahead of Wall Street’s consensus estimate.
On the news, Talbot shares gained 6 1/4 to close at 47 1/16 on the New York Stock Exchange.
“Regarding our current trends, we are seeing an extremely positive customer response to our new spring line,” Arnold B. Zetcher, Talbots president and chief executive, said in a statement. “In light of these trends, we are now looking for comparable-store sales for March to be at least in the low-teens, which is significantly higher than our original plan.”
Last March, Talbots had a same-store gain of 9.6 percent. Wednesday’s statement was an unusual step for the Hingham, Mass, firm, which rarely makes midmonth comments on sales trends.
“Their business is very, very strong,” said Janet Kloppenburg, analyst at BancBoston Robertson Stephens. “They’re running on all cylinders.”
As a result of Wednesday’s announcement, Kloppenburg raised her first-quarter estimate for Talbots by five cents to 78 cents, compared with 62 cents a year ago. “We feel like it could even go higher,” she said.
“I think we absolutely got the fashion right for our customer,” Zetcher told WWD. “In virtually every category we’re finding the customer likes what she’s seeing.” Zetcher said Talbots’ career business is “coming back in a really strong way,” with items like a four-button jacket selling very well, Zetcher said. Sweaters and casual are also strong categories, he said.
For the quarter just concluded, Talbots’ total sales climbed 12 percent to $375.6 million from $335.4 million. Retail sales climbed 13 percent to $320.9 million, and same-store sales improved 8.9 percent.
“Due to the strong success in each of our concepts, we expect to accelerate our store opening program this year,” Zetcher said. “Our plan calls for opening approximately 52 new stores and to be operating about 720 stores by the end of the fiscal year.”
Of the stores planned this year, 16 will be in its core Talbots’ Misses format, while 21 will be in the Talbots Petites concept. Talbots will open six of its large-size Talbots Woman stores to end the year with eleven. The large-size concept is doing well and has the potential to reach about 175 units in the U.S., Zetcher said.
Talbots will add four or five of its children’s stores and three or four accessories units, where “the eventual opportunity looks to be very healthy,” Zetcher said. Talbots operates 35 accessories stores and 54 children’s stores.
Zetcher said he expects at least another 50 units to open in 2001. Although the firm has about 25 stores in Canada and six in the U.K., most of its expansion will be in the U.S., he said. Talbots has 676 stores, over 400 of them in the Talbots Misses format.
At Talbots’ catalog division, which includes the contribution of its Web site, sales gained 6.4 percent to $54.7 million in the quarter. In 2000, Talbots plans to continue last year’s targeted mailing strategy that led to higher sales despite lower page circulation.
The Web site is making a positive contribution to Talbots’ operations without hurting profitability, Zetcher said. Talbots will now start to market the site more heavily through its catalog and on shopping bags in the retail store, he said.
“We’re really pleased with the approach we took,” Zetcher said. “We decided early in the game we weren’t going to jump in with both feet until we totally understood it. We launched in November and we’re very happy with the performance.”
For the full year, Talbots earnings jumped 59.4 percent to $58.5 million, or $1.85, from $36.7 million, or $1.15.
The retailer’s sales rose 13 percent to $1.29 billion from $1.14 billion. Retail sales climbed 13 percent to $1.1 billion, and same-store sales improved 8.7 percent.
“Given our strong momentum, while it is still early in the year, we believe we are well positioned for continued growth in 2000,” Zetcher said in the statement. “I am proud of our entire organization for the tremendous accomplishments of 1999, and I feel confident in our ability to achieve our objectives in the coming year.”
Kloppenburg estimates in fiscal 2000, Talbots’ per-share earnings will climb 18.9 percent to $2.20.