Talbots Sees Sales Strength

But costs tied to an acquisition are rising.
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Talbots (TLB) said sales trends at its flagship Talbots line were better than expected. But the company said the third quarter will be hit by rising costs tied to the acquisition of J.Jill.

The Hingham, Mass., retailer said third-quarter same store sales should be in the positive mid-single digit range, up from its previous outlook of low-single digits.

"We not only experienced significant strength in our regular-price comparable store sales, but our markdown performance was also very healthy," said CEO Arnold Zetcher.

But Talbots said its turnaround efforts at the recently acquired J.Jill brand won't begin to bear fruit on the revenue line till the second quarter of 2007 and accelerated some cost cutting there. The company said J.Jill comps will be down in the mid-to-high single digit range percentagewise.

Talbots said it will close its Hingham call center in the third quarter, rather than later in the fall as earlier planned, resulting in a 2-cent rise to third-quarter integration costs. Those costs will now amount to about 14 cents a share for the quarter, Talbots said.

Talbots said it expects to make 12 to 15 cents a share on a GAAP basis. Analysts surveyed by Thomson Financial were expecting 15 cents.