TLB Sees Q2 Revs and Margins Significantly Lower YoY

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Last Update: 07-Jun-11 09:34 ET

Talbots (TLB $3.11 -1.31) reported first quarter earnings of $0.08 per share, excluding non-recurring items, $0.05 better than the Thomson Reuters consensus of $0.03.

Revenues fell 6.0% year/year to $301.3 million versus the $305.4 million consensus.

Second quarter-to-date sales and customer traffic continue to trend negative, with top-line sales to date down ~low-teens year-over-year (consensus -3.1% for the second quarter). The co expects high levels of promotional and markdown activity to continue throughout Q2, resulting in an expected increase in cost of sales, buying and occupancy as a percent of net sales of ~1,000 bps year-over-year. Selling, general and administrative expenses on a dollar basis are expected to increase slightly from the prior year second quarter, due in-part to continued incremental marketing investments.

"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."