The Talbots, Inc. Earnings Cheat Sheet: Margins Shrink with Revenues

The Talbots, Inc. (NYSE:TLB) reported its results for the second quarter. The Company together with its wholly owned subsidiaries is a retailer and direct marketer of women’s apparel, shoes, and accessories.

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The Talbots Earnings Cheat Sheet for the Second Quarter

Results: Swung to a loss of $37.3 million (54 cents per diluted share) in the quarter. The Talbots, Inc. had a net income of $941,000 or one cent per share in the year earlier quarter.

Revenue: Fell 9.9% to $271.1 million from the year earlier quarter.

Actual vs. Wall St. Expectations: TLB reported an adjusted net loss of 51 cents per share. By that measure, the company fell short of the mean analyst estimate of a loss of 44 cents per share. It beat the average revenue estimate of $264.6 million.

Quoting Management: Trudy F. Sullivan, Talbots President and Chief Executive Officer, commented, “As expected, our second quarter results reflect high levels of promotional and markdown activity. While we remain confident in our long-term strategic direction, in the near-term we are focused on delivering a more compelling, balanced merchandise assortment and driving improved top-line sales. We announced separately this morning that we have made a change in our leadership team with respect to the oversight of creative and design which we believe will facilitate improvements to the direction of our merchandise and our overall brand positioning.”

Key Stats:

Gross margins fell 11.5 percentage points to 23.4%. The contraction appeared to be driven by falling revenue, as the figure fell 9.9% from the year earlier while costs rose 6.1%.

Revenue has fallen in the past four quarters. Revenue declined 6% to $301.3 million in the first quarter. The figure fell 7.4% in the fourth quarter of the last fiscal year from the year earlier and dropped 3.2% in the third quarter of the last fiscal year from the year-ago quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the first quarter, it topped the mark by 5 cents, and in the fourth quarter of the last fiscal year, it was ahead by 4 cents.

Competitors to Watch: Coldwater Creek Inc. (NASDAQ:CWTR), Christopher & Banks Corp. (NYSE:CBK), New York & Company, Inc. (NYSE:NWY), Ann Inc (NYSE:ANN), Ascena Retail Group Inc (NASDAQ:ASNA), Charming Shoppes, Inc. (NASDAQ:CHRS), Limited Brands, Inc. (NYSE:LTD), Chico’s FAS, Inc. (NYSE:CHS), The Cato Corporation (NYSE:CATO), J.C. Penney (NYSE:JCP), Nordstrom (NYSE:JWN), and Destination Maternity Corp. (NASDAQ:DEST).

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(Source: Xignite Financials)