Hazy Holiday Outlook for Talbots

The retailer posts in-line third-quarter earnings but declines to give guidance for current period.
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Talbots

(TLB)

posted in-line third-quarter earnings Wednesday but took a cautious tone about the holiday period, noting tepid demand from its "non-core" customer.

For the period ended Oct. 28, the women's clothing seller earned $8.1 million, or 15 cents a share, down sharply from earnings of $20 million, or 37 cents a share, a year earlier. The latest quarter's results were weighed down by costs of 16 cents a share related to its acquisition of J. Jill, and 4 cents a share in stock-options expense.

The earnings matched Thomson First Call's average analyst estimate, which included the charges. Talbots' own guidance had called for earnings of 12 cents to 15 cents a share.

The retailer's sales rose to $568.6 million from $426.3 million, while same-store sales increased 2.3%. Analysts expected sales of $564 million.

Same-store sales advanced 4% for the Talbots brand, but tumbled 6.6% at J. Jill. Both stores cater to women over the age of 35.

The company said the Talbots brand was helped by sharper pricing, increased style count, changes to its product flow and adjustments to its promotional calendar. For J. Jill, Talbots said same-store sales were as expected.

Looking ahead, Talbots said it has see healthy same-store sales trends for its core Talbots brand customers, a significant improvement from softness in the latter part of the October. But the company said it has "not yet seen the level of demand from the non-core customer that we anticipate."

"In addition, we are only two weeks into the quarter and have a number of marketing initiatives planned throughout the period that we expect to benefit from, including our important semi-annual sale event that traditionally begins the day after Christmas," the company said. "Given these factors, at this early stage in the fourth quarter, we believe we are not in a position to provide our outlook for earnings per share and plan to give additional details when we are further into the period."