Tough First Quarter For Talbots

First-quarter sales at women’s apparel merchant The Talbots dropped 26%, to $306.2 million from $414.8 million last year. Retail sales fell 26%, to $256.4 million from $345.1 million. For the period ended May 2, direct sales sank 29%, to $49.8 million, from $69.7 million. Net loss was $18.8 million compared to last year’s first-quarter net income of $18.5 million. Same-store sales declined nearly 27%.

Talbots CEO Trudy Sullivan said in a release: “We are making steady progress in implementing our strategic initiatives to better position our company for long-term success. This includes the announced signing of an asset sale agreement for J. Jill, the opening of eight upscale outlet stores, and additional actions that will further contribute to achieving our goal of $150 million in annualized cost reduction.”

Sullivan added: “Looking at our first quarter results, sales remained difficult and while in-line with our expectations, we are not satisfied. We did have a substantial rebound in merchandise margin from the fourth quarter, and believe our merchandise assortments are getting stronger in our key item categories, including casual knits, sweaters, pants and accessories.”

As part of its $150 million expense reduction program, company officials announced they will reduce their corporate headcount across all locations by approximately 20%, including the elimination of open positions, for an annualized savings of approximately $21 million.

Net expense associated with the reduction, which is primarily for severance and severance benefits, is approximately $5.4 million. According to the release, Talbots has identified $125 million of annualized cost reductions, an increase from the $100 million the company announced in April.

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