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Talbots Q3 Loss Widens Sharply, Details Weak Outlook; Stock Down

Women's apparel retailer The Talbots Inc. (TLB), Wednesday reported a wider loss for the fourth quarter, hurt mostly by steep rise in selling and other costs, as well a drop in sales. Nonetheless, results were better than what Street analysts expected.

Talbots has been closing stores and has been exploring strategic alternatives. The company has forecast weak sales for the first quarter, the news of which dragged its shares down by 7 percent in after-hours trade on the New York Stock Exchange.

Talbots said during the fourth quarter its cost of sales, buying and occupancy as a percent of net sales increased 510 basis points from last year. This was due mainly to pared merchandise margin resulting from higher levels of markdown and promotional activity.

Selling and other costs also escalated due to incremental marketing expenses, certain executive post employment benefits and legal fees related to its search for strategic alternatives.

Hingham, Massachusetts-based Talbots incurred fourth-quarter net loss of $53.3 million or $0.77 per share, compared to net loss of $2.8 million or $0.04 per share last year.

Excluding items, loss for the quarter was $36 million or $0.52 per share, compared to loss of $9.6 million or $0.14 per share in the prior year.

On average, 9 analysts polled by Thomson Reuters expected a loss of $0.56 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter dropped to $289.4 million from $292.6million last year. Analysts expected revenue of $268.87 million for the quarter.

Looking ahead, Talbots expect first-quarter sales of about $272 million, down 9.6 percent from last year. Analysts currently expect revenue of $283.99 million for the quarter.

During the fourth quarter, Talbots closed 47 locations as part of its store rationalization plan and expects to close about 110 locations through fiscal 2013.

Talbots said it is continuing to explore alternatives to maximize value for stockholders, while indicating no certainty of any outcome.

TLB closed Thursday at $3.13 in regular trade, with the stock dropping $0.23 or 7.35% in after hours. In the past year, the stock has traded between $1.46 and $10.40.

by RTTNews Staff Writer

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