Talbots 2Q comps down 12%

HINGHAM, Mass. Talbots announced total sales for the 13-week second quarter ended Aug. 2 of $528 million, versus last year’s reported sales of $572 million. By brand, retail store sales were $352 million for Talbots, compared to $392 million last year, and $74 million for J. Jill, compared to $80 million last year.

Comparable-store sales declined 12%, with Talbots brand comp sales decreasing 11.7% and J. Jill brand comp sales decreasing 13.2% in the period. Consolidated direct marketing sales for the thirteen-week period were $102 million, including catalog and Internet, compared to $100 million last year.

"Our second-quarter sales results reflect a weak response to our Talbots and J. Jill brand end of season clearance events, which began in June," stated Trudy F. Sullivan, president and ceo. "Further, we made two key business decisions during the quarter that although we expect to benefit from in the third quarter, negatively impacted our second-quarter results.

"First, we shifted the start of our Talbots brand June end of season clearance event to one week later versus last year, and plan to extend it through mid-August, compared to the year-ago event, which ran one day in August," continued Sullivan. "This timing has had an adverse effect on our company’s second-quarter sales, but is expected to benefit August sales ... The second decision that impacted our results was a more aggressive approach to liquidation during the J. Jill brand’s June end of season clearance event. The heavy inventory position heading into the clearance event led to deeper markdowns and will result in an approximate 490 basis point decline in the J. Jill brand merchandise gross margin in the second quarter. However, this will enable the brand to start the fall season with a lean inventory position."

Sullivan concluded, “As we enter the third quarter, we are optimistic about the opportunities that lie ahead as we introduce our revamped and reinvigorated product offerings at both brands reflecting the new creative teams. However, we remain cautious about the retail sector given the continued uncertainty in the macroeconomic environment and the consumer’s judicious purchasing behavior. While we are maintaining our previously announced outlook for the full-year 2008 earnings, we will continue to closely monitor our performance and the macro environment, as we focus on driving growth across the organization and enhancing our long-term shareholder value. Overall, we continue to be confident in our approach and the steps we are taking to manage our business.”