Talbots Operating Profit Tops View, Net Income Tumbles

Hingham, Mass. The Talbots Inc. posted higher-than-expected quarterly operating profit on Wednesday and affirmed its full-year forecast. The retailer said better inventory management, expense controls and monthly markdowns contributed to a "dramatic improvement" in its merchandising gross margin.

Talbot’s net income for the period ended May 3, dropped 69%. Earnings slipped to $1.6 million, compared with $5.2 million in the prior year.

Excluding a loss related to the closing of its children's, men's and British businesses and restructuring charges, Talbots said profit from continuing core operations was 21 cents per share in the first quarter, way ahead of analysts' average forecast of 11 cents, according to Reuters Estimates.

Total company sales for the quarter were $542 million. By brand, retail store sales were $363 million for Talbots compared to $387 million last year, and $71 million for J. Jill compared to $81 million last year.

Same-store sales declined 9.8% for the quarter. By brand, comparable store sales for Talbots and J. Jill decreased 7.4% and 20.2% respectively.

“During the quarter, we focused on the strategic initiatives we put in place to better manage our inventories, control expenses, streamline our operations and innovate our marketing/promotional programs,” said Trudy F. Sullivan, Talbots president and CEO. “It was a solid quarter and we are encouraged with our progress, particularly in the Talbots brand, where we have seen a dramatic improvement in our merchandising gross margin.”