Key questions and answers from the third quarter earnings call conducted by The Talbots Inc. (TLB: chart) on November 25, 2008.

Jennifer Black (Jennifer Black & Associates): Can you comment on your lapse customer returning and your current customer not lapsed coming back more frequently as well?

Trudy Sullivan: We know our current customer is an intense loyalist, so she shops very frequently with us. Our own study shows she’s virtually in the store multiple times a month, but we are really encouraged by the lapsed customer.

We have reached out to her through the catalog and the response rate on the catalog from the lapsed customers actually surprised us. It is almost as the same response rate that we would get in our current house file, so that’s really encouraging.

We just started to reach to the lapsed customer with this fall, so her response enables us to mail her again, probably at least another book in this fall and also we’re getting them back in the store through these hostess events.

Adrienne Tennant (FBR): To the extent that you have a dividend, why in this type of environment when we are looking at such intense cash preservation would you not consider cutting that or doing away with it altogether?

Trudy Sullivan: Our board looks at that dividend every single quarter and takes the prudent decision at that time, so of course it will be among a number of things that the board we consider.

Kimberly Greenberger (Citigroup): Could you comment on any vendors or factors that are cutting back on their ability to underwrite your receivables?

Ed Larsen: I’m not aware of any vendors or factors that have reduced their commitments to Talbots. About 95% of our vendors or volume is on open account, a very limited amount is on LC’s and they are very well supporting us all the way through. They are eager to do business with us.

Barbara Wyckoff (Buckingham Research): Could you talk about your systems for running the business?

Ed Larsen: We are very satisfied with our systems. If we started spending more money on systems, going back to Y2K would have made your upgrades to our financial systems; we’ve upgraded our PLS systems.

We have always upgraded our merchandising systems; we’ve brought up profit logic last year; our markdown optimization. We have key things on the slate for going forward; most of them in the area of sourcing and inventory management planning, but we are making good progress and we are satisfied. We have the tools to run the business where we think we need to run it.

Roxanne Meyer (UBS): Could you elaborate on your CapEx plan for next year?

Ed Larsen:We are going to be very tight on capital next year. First, we look at our expansion plan, we’re pushing everything out that we can out of 2009 into 2010, but we want to support our premium outlet strategy.

We are going to open 12 premium outlet stores next year, so that’s a lock and we have about eight other Talbots stores that we attributed to; we will keep those; that’s 20 on the Talbots brand and right now we have three Jill stores that we’re committed to, so we would open those.

That is going to take us for capital and some renovation money, probably somewhere in the low to mid 20s and then we’re looking at the IT study we need to do and other kind of corporate things. We will be below $40 million, that’s kind of our goal at this point. We do have some store impairment from Talbots stores that is the $2 million you’ll see on P&L for impairment.

Marni Shapiro (The Retail Tracker): Can you talk a little bit about different trends and traffic between stores in malls versus non-malls, parts of the country and also your direct business versus the stores, traffic wise?

Trudy Sullivan: The traffic trends are pretty consistent across store types, with the exception that some of our stores that are in the most upscale malls are having that the highest traffic issues and so it could be reflective of what’s happening in that class of trade, but its pretty consistent across the board.

Interestingly stores that are non-mall, town center stores are having the least problem with the negative traffic trend. Our catalog business isn’t very good. Our Internet business is increasing as a percentage of our overall direct business. We did shift and book out of the third quarter and into the fourth quarter strategically; actually added pages and made it a big holiday book and as we said in our opening remarks, we think this will have a definite benefit to the direct business in the fourth quarter.

Jennifer Black (Jennifer Black & Associates): Comment about opportunities in jewelry and any accessory classifications that you are excited about?