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$7.50 -0.38 (-4.82%)
5/16/2008 4:03 PM

The Talbots, Inc. (TLB)

CAPS Rating:
*

The Company, together with its wholly owned subsidiaries, is an international specialty retailer and cataloger of women's, children's, and men's apparel, accessories and shoes.

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Avatar NetscribeRetail (< 20) Submitted: 1/08/07 7:24 AM : Outperform Start Price: $22.12 TLB Score: -67.41

Talbots is a specialty retailer and cataloger offering a collection of classic sportswear, casual wears, dresses, coats, sweaters, accessories and shoes for men, women and children. The company currently operates 1,118 Talbots across U.S, Canada and U.K with 94% of the revenues being domestic. They acquired J.Jill Group in May’06, which has 228 stores across U.S. J.Jill offers stylish and artistically inspired women’s apparel.

Company is targeting female baby boomers, which have longer life spans and with more disposable income, as they outpace average women apparel spending. The third quarter results have been good with 33% rise in turnover. Both women and kids line of business posted positive same-store sales. Revenues were primarily driven by J.Jill, which now contributes about 20% to the top-line. Additionally, direct marketing segment forming 17% of sales has also seen 40% revenue growth in this fiscal. It was primarily due to strong internet sales across both Talbots and J.Jill brands.

Management expects cost-savings of about $36 million in 2007 through the acquisition of J.Jill. Over 200 J.Jill systems would be implemented in Talbots Architecture, which would help the company in development, sourcing and flow of merchandise. Moreover, J Jill’s Experian knowledge data warehouse would aid Talbots to track the details and buying patterns of their customers more efficiently thereby enhancing customer satisfaction and ultimately customer base. Also, company’s emphasis on full-price selling in 2007 could improve their margins.

Encouraged by the recent sales performance, company is keen to shift its offerings by changing their color palette with fewer embellishments, which could drive volumes in 2007. The company is on a growing path with about $51 million capital expenditure planned for the remaining period of fiscal 2006. Supporting all these facts, Talbot’s scrip should move northwards.

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Avatar NetscribeRetail (< 20) Submitted: 5/30/07 6:56 AM

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Talbots (TLB) seems to be an elegant player in the highly fragmented apparel and accessories market. The retailer has offered right things at the right time, thanks to the trend analyzing abilities of the company’s new merchandising team. Endorsing the same, company’s sales jumped by over 26 percent in the first quarter of fiscal 2007. Albeit, net income tapered as a result of acquisition related costs of J.Jill, management expects cost synergies worth $36 million in fiscal 2007.

Going forward, management has plans to broaden the J.Jill apparel offerings in order to better serve their core female customers. Also, the company has enhanced its Talbots "brand traffic-driving events" for the remainder of the spring season, which could ignite revenues. Store opening program of the company looks pretty much on track as it plans to open 11 new stores in the second quarter. Moreover, considering the fast growing market for plus size women, TLB has started offering selection of clothing in larger sizes.

Regular price selling has been the forte of TLB and management is optimistic about the second half of the fiscal as it plans to scale its inventories in a manner that would minimize the markdowns. Also, learning from the past lessons, TLB is altering the colors of its apparel offerings by making it less embroidered, which would recoup the customer traffic. Additionally, TLB is likely to experience operational improvements due to the execution of J.Jill’s infrastructure into its systems. Thus, TLB looks a good buy at the prevailing price levels.

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