This summary is based on the second quarter fiscal 2008 earnings call conducted by The Talbots Inc (TBL) on August 27, 2008.
Management:
President, CEO and Director: Trudy F. Sullivan
CFO and Treasurer: Edward L. Larsen
President of J. Jill Brand: Paula Bennett
SVP, Investor and Media Relations: Julie Lorigan
Key Investor Issues:
- A quarterly dividend of 13 cents per share was paid.
- Q2 loss per share was 47 cents versus loss per share of 25 cents in the year ago quarter.
- Fiscal 2008 total company’s EPS guidance is expected to be in the range of 15 cents to 25 cents.
Half Year Financial Highlights:
- On a GAAP basis, net loss for the six month period was $23.4 million or 44 cents per share versus a reported net loss of $8 million or 15 cents per share for the same period last year.
- The net loss from ongoing operation was $7.3 million or 14 cents per share, excluding a net loss of $10.3 million or about 19 cents per share related to the operations of Talbots Kids, Mens and U.K. non-core businesses, which are closing.
- The net loss is also exclusive of approximately $5.8 million or 11 cents per share in restructuring charges associated with strategic initiatives related to the ongoing core operations.
- The result compares to last year’s net loss of $2.1 million or 4 cents per share on a comparable basis.
- The total consolidated company sales were $1,070 million for the six month period.
- By brand, the retail sales were $715 million for Talbots versus $779 million last year.
- J. Jill half year retail sales were $146 million compared with $161 million last year.
- The consolidated direct marketing sales were $209 million, inclusive of catalog and Internet. This compares with $206 million last year.
- The total company comparable store sales dipped 10.9% for the period.
- By brand, comparable store sales for Talbots eased 9.5% and J. Jill’s comparable store sales fell 16.8%.
Second-Quarter Financial Highlights:
By brand, retail store sales were $352 million for Talbots.
- This compares with $392 million last year.
- J. Jill retail store sales were $74 million versus $80 million last year.
- The consolidated direct marketing sales, including catalog and Internet were $102 million during the quarter compared with $100 million for the same period last year.
The second quarter net loss from ongoing operations was $18.3 million or 34 cents per share.
- This excludes a net loss of $4.4 million or about 8 cents per share related to the operations of Talbots Kids, Men’s and U.K. non-core businesses.
- It also excludes approximately $2.3 million or 4 cents per share in restructuring charges associated with strategic initiatives related to the ongoing core operations.
- The result compares with last year’s net loss of 18 cents per share on a comparable basis.
The total company inventory was down 22% at the end of the second quarter.
- The lean inventory position, improved IMU and strategic change to monthly markdown cadence drive increase of 380 basis points in Talbots brand second quarter merchandise gross margin for ongoing core operations versus last year.
- The total company merchandise gross margin from ongoing core operations improved 190 basis points compared with the prior year.
Selling, general, and administrative expense in the second quarter were $170.7 million, at 33.6% of net sales.
- This compares with $168.7 million and 30.6% of net sales last year.
- This result also reflects negative leverage from the comp decline.
- The net interest expense for the quarter was $4.9 million versus $8.2 million last year, reflecting both long-term and short-term interest costs and income taxes for the quarter were a benefit at 36.6%.
The company ended the second quarter with total accounts receivable of $200 million versus $192 million last year.
- These comprised entirely of Talbots charged receivables.
- Talbots'' charge penetration increased to 47% of sales year-to-date versus 43.5% last year year-to-date.
- The net bad debts are slightly above last year’s level, with an increase in write-offs of approximately $200,000 in the second quarter and $400,000 year-to-date.
- The accounts receivable continues in excellent condition with only 2% of the portfolio over 30 days past due.
