This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

10 Retail Stock Losers of 2011: Which Will Recover in 2012?

3. Talbots

Up until 24 hours ago, Talbots (TLB) originally topped the list as the largest decliner for the year, but that all changed after the women's apparel retailer received (and subsequently rejected) a private equity offer from Sycamore Partners.

Shares of Talbots soared 70% on Tuesday to $2.65. Nonetheless, the stock is still off nearly 70% in 2011 from its 2010 close at $8.52.

Talbots received a bid of $205.2 million, valuing the stock at $3 per share. This is a 92% premium over Talbots' closing price of $1.56 on Tuesday. Sycamore Partners is Talbots' largest shareholder with a 10% stake.

Talbots has met with Sycamore, but the firm said that Talbots' managers have rejected attempts to discuss any "value-enhancing transaction."

"Given the extended period of negative trends, rapidly deteriorating performance, current liquidity issues and heavily strained balance sheet and cash flow at Talbots, we cannot argue with an all-cash premium offer presented by Sycamore," Janney Capital Markets analyst Adrienne Tennant wrote in a note. "While a full-blown turnaround would likely yield a far higher valuation, there is tremendous uncertainty surrounding such a turn, and a new management team will likely take another 12 months to execute a new strategy and impact the business in any material way."

This comes just days after the women's apparel retailer announced its Chief Executive Officer Trudy Sullivan intends to retire once the company finds her replacement.

Sullivan was brought on board four years ago to turn around the company, but she will leave Talbots in just as precarious a position as when she started.

Talbots reported a wider-than-expected loss in its third quarter, weighed down by heavy discounting. The company has posted a loss in three of the last four years.

The holiday period doesn't look much merrier, as Talbots is forced to continue to promote heavily and November revenue was down more than 5%.

Following its quarterly report, the company announced it will lay off about 9% of its workforce, or about 100 employees. It will also suspend national advertising and TV campaigns and cut inventory levels.

Talbots has been shuttering underperforming stores and throwing its money into remodeling "premium" locations.

Sycamore said that it is frustrated with the company's "rapidly deteriorating situation" during the all-important holiday shopping season and decided quick action was needed. '

"We do not believe Talbots has the balance sheet and cash flow to sustain another failed attempt at a turnaround," Janney's Tennant wrote. "Given the uncertain state of the turnaround strategy, we note that it could be some time before the stock itself were to rise back about $2 on the fundamental merits of a turnaround. Although investors might think they could get more with a solid long-term turnaround, we think investors should get paid in the immediate term, with the potential for a higher bid upon Sycamore's due diligence."

9 of 11

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,563.30 -317.06 -1.88%
S&P 500 1,930.67 -39.40 -2.00%
NASDAQ 4,369.7730 -93.1290 -2.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs