Talbots Beats Earnings Targets, Sets Online Launch

Plus, Saks and Dillard's rally.
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Apparel retailers

Talbots

(TLB)

,

Dillard's

(DDS) - Get Report

and

Saks

(SKS)

reported mixed results Wednesday, and their shares reacted in mixed fashion as well.

At Talbots, a return to its signature conservative clothing helped the retailer beat third-quarter consensus earnings estimates by 5%. Talbots also announced the launch of its online retail site,

talbots.com

. But the stock, which has run up this year even as most retailing stocks have retreated, slipped 1 to 47 3/16 around midday. (Talbots closed down 1 1/4 to 46 1/2.)

Talbot's said third-quarter net income jumped 57% to $20 million, or 63 cents a share, up from $12.7 million, or 40 cents per share, a year earlier.

"They are in a turnaround mode," said

Robertson Stephens

analyst Janet Kloppenburg, who rates the stock an intermediate-term accumulate. "Every quarter we've raised our estimates and they have beaten them." Robertson Stephens has done no underwriting for Talbots.

While Kloppenburg acknowledged that the online sales might cannibalize some of its retail business, it will result in "increased exposure and brand awareness" in the long term.

On the flip side, Dillard's missed earnings expectation by 13%, but its stock rose into positive territory after initially retreating on the news. The stock was up 5/16 to 19 1/16 around midday. (Dillard's closed up 9/16 to 19 3/8.)

The company reported third-quarter earnings of 33 cents a share, short of the 38-cent consensus view. For the quarter ended Oct. 30, Dillard's reported net income of $34.8 million, reversing a year-ago loss of $50.2 million, or 47 cents per share, after a $95.1 million acquisition charge.

Bill Dillard II, chief executive of Dillard's, said in a press release that he was disappointed with performance of stores acquired in last year's acquisition of

Mercantile Stores

. These outlets, he said, "have not achieved anticipated performance levels, resulting in a drag on our operating results."

Even though same store sales increased 5% for the period, Dillard cautioned of continuing margin pressure at the acquired stores. "Because the sales volume in the stores has not recovered as rapidly as we hoped, we expect some continuing margin pressure in these stores during the fourth quarter," Dillard said.

Shares of Saks rallied after the company reported third-quarter earnings that met analysts' expectations and set a strong year-end forecast.

Saks Tuesday evening projected fourth-quarter earnings of $1.13 a share, above the $1.09

First Call/Thomson Financial

consensus estimate. Wednesday the stock rose 13/16, or 4.9%, to 17 7/16. (Saks closed up 1 5/16 to 17 15/16.)

For the third quarter ended Oct. 30, net income fell 41% to $31.6 million, excluding certain items, or 22 cents a share, from $53.9 million, or 37 cents, in the year-ago quarter. Same-store sales rose 4% from a year ago.