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Talbots shares retreat, swings to Q3 loss

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Female apparel retailer Talbots (NYSE:TLB) said Thursday it swung to a loss in its third quarter amid higher markdowns and promotional activity.

The Hingham, Massachusetts-based company lost 20 cents, or 10.05 percent, falling to $1.79 a share today in New York.

For the quarter that ended October 29, Talbots posted a loss of $22 million, or 32 cents a share, compared with a year-ago profit of $17 million, or 24 cents a share.

Excluding one-time items such as restructuring charges and the company’s store re-vamping efforts, its adjusted loss was 22 cents, in contrast to a year-earlier profit of 27 cents.

Revenues slid 6.6 percent to $279.5 million in the quarter.

Analysts, on average, had expected the clothing retailer to post a 16-cent loss on revenues of $271 million, according to Bloomberg.

Chief executive, Trudy Sullivan, said in a statement: "While we are not satisfied with our performance, we believe the modifications we are making to our merchandise assortment are better resonating with our core customer."

Same-store sales were down 2.4 percent, despite growth during October, and declined four percent including direct-marketing purchases, the company said. Comparable sales are a key measure by which to judge a retailer's financial health, as they exclude sales of stores that recently opened or closed.

The struggling retailer’s inventory grew 13.4 percent to $209.4 million versus $184.7 million in the prior year quarter. Talbots attributes the rise to lower-than-expected sales and the earlier timing of holiday receipts.

In the third quarter, the company opened one Talbots upscale outlet and closed 16 Talbots stores, ending the period with 551 stores, including 39 Talbots upscale outlet stores.

Beginning in the fourth quarter, Talbots said it will implement cost-cutting measures that are expected to save the company $50 million annually.

The steps, which are expected to be completed by January 2012, include suspending national advertising and TV campaigns in the near-term and slashing nine percent of its workforce, or about 100 jobs.

Talbot said it expects the "holiday season to remain challenging and highly promotional", and it will continue to respond accordingly.

In addition, the company noted that comparable sales in November fell by 5.4 percent, despite a strong Black Friday and Cyber Monday showing. Talbots also said that it has seen improved customer traffic so far in the fourth quarter.

Talbots is a specialty retailer and direct marketer of women’s apparel, accessories and shoes sold under its namesake brand.

Quick facts: The Talbots, Inc.

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NYSE:TLB
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