Talbots announces 13.9% 3Q comps drop, sale of J.Jill brand

HINGHAM, Mass. Talbots announced third-quarter sales of $357 million for the thirteen-week period ended Nov. 1, versus last year’s sales of $414 million. Comparable-store sales declined 13.9%

"Our third-quarter sales results reflect a challenging macro-environment, which was exacerbated in mid-September by a meaningful decline in customer traffic resulting from consumer reaction to the financial crisis and related economic turmoil," stated president and ceo Trudy F. Sullivan. "Entering the quarter, we were cautiously optimistic given our new merchandise and marketing strategies ... However, our overall performance was significantly impacted when consumer traffic and spending dropped off dramatically with news of the global financial fallout.

"This is clearly a very difficult economic cycle. That said, we believe that we are effectively managing the business by preserving capital and liquidity," continued Sullivan. "In the near-term, we continue to minimize discretionary spending, tightly control our inventory and continue to drive further improvements in working capital as we focus on enhancing our cash flow to fund the successful turnaround of our company and pay down debt."

The company also announced plans to focus on its core Talbots business and pursue the sale of its J. Jill brand. The company recently discontinued its Talbots Kids', Men's and U.K. operations.

"We have made great strides in reenergizing the Talbots brand and are encouraged by both our existing and lapsed customers' response to our product and marketing efforts," said Sullivan. "In light of the current macro-economic environment, we therefore feel it is a strong move to focus solely on executing the successful turnaround of our core brand. While we have made solid progress in improving the J. Jill brand's operation, we have made the strategic decision to pursue its sale.

"As we lay the foundation for our 2009 operating and financial plan, our board of directors and senior management team are continuing to review all aspects of our strategic plan, including store expansion, capital expenditures and working capital investment, as well as our dividend payout, all with a focus on maximizing our financial flexibility and building a strong capital position," concluded Sullivan.