Talbots 1Q income improves, but sales fall

HINGHAM, Mass. — Talbots reported that first quarter income from continuing operations was $0.9 million, or 1 cent per share, compared with last year’s loss from continuing operations of $7.1 million, or 12 cents per share.

Trudy Sullivan, Talbots president and CEO, commented, “Our first quarter performance reflects an inconsistent customer response to our merchandise assortments, a challenging competitive environment and high levels of promotional activity. Although we did see a positive customer reaction to our March brand moment, our February and April brand moments underperformed and sales in each month of the quarter decreased year over year.”

Talbots reported that net sales decreased 6% to $301.3 million, compared with $320.7 million in the same period last year. Consolidated comparable sales decreased 7.7%.

In the first quarter, the company opened 6 Talbots upscale outlets, closed 6 Talbots stores and ended the period with 568 stores, including 34 Talbots upscale outlet stores.

Sullivan concluded, “We expect second quarter sales and gross margin will be significantly below last year, resulting from high promotional and markdown activity as we work to clear slower moving goods and better position ourselves for fall. As previously stated, fiscal 2011 will be a transition year and as we move forward in our turnaround efforts this year, our financial flexibility and liquidity are expected to fully enable us to support our anticipated working capital needs and the implementation of our strategic initiatives.”