Talbots DM Sales Drop Sharply in First Quarter

The Talbots, Inc. reported a first quarter net loss of $18.8 million, compared to net income of $18.5 million one year ago. The company also said that it plans to continue streamlining operations and plans further reductions in headcount.

Sales for the 13 weeks ended May 2, 2009 were $306.2 million compared to $414.8 million last year. Comparable store sales declined 26.9% for the period. The company warned that it also expects a loss in the second quarter.

Direct marketing, including catalog and Internet sales, also took a hit dropping to $49.8 million for the first quarter, compared to $69.7 million last year.

The company is planning more corporate job cuts across all locations, about 20% of staff, in an effort to save about $21 million. The company has now identified $125 million of annualized cost reductions, an increase over the $100 million announced in April, Talbots said.

The company also said that sales remain difficult and that it continues to “tightly manage” inventory. Its merchandise assortments are getting stronger in key categories, including casual knits, sweaters, pants and accessories.

“We are making steady progress in implementing our strategic initiatives to better position our company for long-term success,” Trudy F. Sullivan, Talbots president and chief executive officer, said in a release. “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.”

Talbots is moving forward with long-range plans and has launched it Talbots Upscale Outlet concept opening 12 stores this year. The outlets will open in places like Clinton Crossing in Connecticut and St. Augustine Premium Outlets in Florida.

The company previously announced that it has agreed to sell the J. Jill brand assets to Jill Acquisition, LLC an affiliate of Golden Gate Capital, a San Francisco-based private equity investment firm, for approximately $75 million.