Talbots returns to 3Q profit on lower charges

AP News
Posted: Dec 08, 2009 12:13 PM

Talbots Inc. said Tuesday it made money in the third quarter, benefiting from lower charges, trimmed expenses and a smaller loss from discontinued operations.

The results were much better than Wall Street expected, sending the company's stock up $1.65, or 22.9 percent, to $8.86 in midday trading. The shares have traded between $1.45 and $12 over the last year.

The women's specialty retailer earned $14.6 million, or 26 cents per share, after a loss of $170.8 million, or $3.19 per share, during the same period a year ago.

Income from continuing operations was $15.5 million, or 28 cents per share, after a loss of $14.8 million, or 28 cents per share. Excluding restructuring and impairment charges of 3 cents per share, income from continuing operations was $17.2 million, or 31 cents per share.

Analysts surveyed by Thomson Reuters, whose estimates normally exclude one-time items, expected a loss of 14 cents per share.

Talbots reported a $911,000 loss from discontinued operations in the fourth quarter, much smaller than the $156 million loss from these operations it posted a year ago.

The company also lowered its selling general and administrative expenses to $99.2 million from $127.3 and cut its total ending inventory by $60 million.

Sales for the three months ended Oct. 31 dropped 14 percent to $308.9 million from $357.3 million, missing Wall Street's revenue estimate of $318.5 million. The company said its sales results declined because it took fewer markdowns.

Sales at stores open at least a year fell 15.9 percent in the quarter. This figure is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

For the fourth quarter, the retailer expects an adjusted loss from continuing operations of 6 cents to 14 cents per share.

Analysts predict a much bigger loss of 52 cents per share.

Talbots had 589 of its namebrand stores in 46 states, the District of Columbia, and Canada at quarter's end.