Financial Reports: Talbots, Chico’s

Direct

Sales Way

Up, Income Down at Talbots
Thanks to its May 2006 purchase of women’s apparel cataloger/retailer J. Jill Group, fourth-quarter direct sales for The Talbots climbed 58%, to $114.2 million for the three months ended Feb. 3. Total sales for the quarter rose 31%, to $638 million. But same-store sales declined nearly 2%. By brand, same-store sales for Talbots decreased 2%, while same-store sales for J. Jill rose 1.5%. As for net income, the Hingham, MA-based apparel merchant earned just $17,000, compared with net income of $19.8 million for the fourth quarter of 2005.

For the fiscal year, catalog/Internet sales soared 45%, to $385 million. Total sales for fiscal 2006 were $2.23 billion, up 23% from $1.81 billion the previous year. Net income was $31.6 million, down from $93.2 million for fiscal 2005.

“As we previously announced, after experiencing a six-month period of healthy positive comps beginning in April and a particularly strong September for the Talbots brand, we anticipated a strong fourth quarter and increased our inventory commitment,” CEO Arnold Zetcher said in a statement. “Unfortunately, these strong sales trends were not sustained, which resulted in higher levels of markdown merchandise available for our post-Christmas semiannual clearance event and deeper discounts.”

As for J. Jill, Zetcher added, “we saw a continued trend of improving business performance throughout the fourth quarter, with comps turning positive for the first time in over a year. However, we did not achieve our overall sales expectations for the period due to weaker-than-anticipated performance across all channels. This also resulted in heavier markdowns during the period, which impacted the bottom line.”

Sales Up, Profits Down at Chico’s Too
Fourth-quarter net sales for women’s apparel merchant Chico’s FAS rose nearly 19%, to $446.0 million for the three months ended Feb. 3. Catalog and Internet sales increased 41%, to $16.3 million. The Fort Myers, FL-based company attributed the rise in direct sales to an increase in the amount of merchandise now available on the Websites of its White House/Black Market, Soma, and Chico’s brands and to increased circulation of its Chico’s catalog. Net income sunk 59%, however, to $18.2 million from $44.4 million last the previous fourth quarter. Same-store sales decreased 2%.

For fiscal 2006, net sales rose 17%, to $1.65 billion. Catalog and Internet sales rose 48.2%, to $53.5 million from $36.1 million. Net income fell 14%, to $166.6 million from $193.9 million in fiscal 2005. Same-store sales for the Chico’s brand were flat, while same-store sales for White House/Black Market increased approximately 11%.

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