Talbots Announces Plans to Close Kids and Mens Concepts
HINGHAM, Mass.–(BUSINESS WIRE)–The Talbots, Inc. (NYSE: TLB) today announced that after a thorough evaluation of its business, it will exit its Talbots Kids and Talbots Mens concepts by September 2008. The decision is part of Talbots strategic business review that was announced on October 9, 2007, which is expected to be completed in the first quarter of 2008.
The strategic review revealed that these concepts did not demonstrate the potential to deliver acceptable long-term return on investment. The executive management team, with the full support of the Company’s Board of Directors, determined that discontinuing these businesses will enable The Talbots, Inc. to redirect resources and capital towards its core businesses, including Talbots Misses, Petites, Womans, Collection, Accessories & Shoes and J. Jill Missy, Petites and Womans.
Trudy F. Sullivan, The Talbots, Inc. president and Chief Executive Officer, commented, “This is a very important strategic move that will greatly contribute to our ability to focus and reinvigorate our core brands and provide sustainable long-term shareholder value. By exiting these concepts, we can focus exclusively on our company’s core strength – the age 35 plus female market, where we believe there is significant opportunity for profitable growth in both our Talbots and J. Jill brands.”
“I would like to sincerely thank everyone, who over the years invested considerable time and effort in developing Talbots Kids and Mens. Regrettably we must make these difficult decisions that will help grow and improve our core business.”
The Talbots, Inc. will close approximately 78 stores throughout the U.S. as a result of this decision, including 66 Talbots Kids and 12 Talbots Mens stores. The closures will impact approximately 800 full- and part-time positions, or approximately 5% of The Talbots Inc. total workforce. The Company is considering ways to offer the affected associates other opportunities, where feasible.
As a result of these actions, the Company currently anticipates total revenue to be impacted by approximately $100 million on an annualized basis. The Talbots, Inc. currently expects that the ongoing operational benefit resulting from these closings would be approximately $13 to $15 million, or $0.15 to $0.18 per diluted share, on an annualized basis.
The Talbots, Inc. anticipates pre-tax expenses associated with the closings of approximately $5 million, or $0.06 per diluted share in the fourth quarter 2007. Virtually all of this charge is related to the non-cash impairment of store level assets. In addition, the Company expects to incur pre-tax expenses of approximately $34 to $42 million, or $0.40 to $0.49 per diluted share in fiscal 2008. The majority of this charge is attributable to lease liabilities and non-cash impairment of store level assets.
Fourth Quarter Update
Separately, The Talbots, Inc. also announced today that its quarter-to-date sales for both its Talbots and J. Jill brands are trending below its expectations. With the important month of January still ahead, the Company will provide further information regarding its outlook for fourth quarter earnings per share when it reports its fourth quarter sales results on February 7, 2008.
The Company continues to evaluate store growth, productivity and distribution channels as part of its strategic business review and will provide additional information regarding its 2008 operating plan on March 12, 2008, when it reports fourth quarter and full year fiscal 2007 operating results.
The Talbots, Inc. is a leading international specialty retailer and direct marketer of women’s apparel, shoes and accessories. The Company currently operates a total of 1,428 stores in 47 states, the District of Columbia, Canada and the U.K., with 1,157 stores under the Talbots brand name and 271 stores under the J. Jill brand name. Both brands target the age 35 plus customer population. Talbots brand on-line shopping site is located at www.talbots.com and the J. Jill brand on-line shopping site is located at www.jjill.com.
Sam’s Notes
I can’t say I am surprised by this. Talbots (and J. Jill) have long been seen as a woman’s brand. Unlike Gap/Old Navy, which appeals to the whole family, Talbots is seen as being targeted at the 35 - 45 year old female market. Men and kids do not want to be a part of that market and far prefer the trendier outlets (Gap/Old Navy). Even young girls prefer Limited 2 for their clothing.
I’m glad Talbots is facing reality and closing these stores that cater outside their market. I see a few months of rough saling before this one picks back up again.
Having grown up in Hingham, MA in the 50s and 60’s, when Talbots was only a local dress shop, I have been brand loyal since my college days. I’m happy that they are returning to concentrate on their main target audience, but am sad that my old home town will be so negatively impacted. I am interested in learning the locations of the other store closings.
The kids business will be sorely missed. They have the best quality by far of most, if not all, kids brand name clothes. Cannot even compare quality to GAP or any other stores except maybe Janie & Jack or Hanna Anderson. The return and freight policy at Talbots is second to NONE. This decision will hurt everyone.