Talbots Inc. (NYSE: TLB) is scheduled to release third-quarter earnings before the market open on Tuesday, December 7, 2010. Analysts, on average, expect the company to report earnings of 26 cents per share on revenue of $303.11 million. In the year-ago period, the company reported earnings of 31 cents per share on revenue of $308.89 million.
The Talbots, Inc., together with its subsidiaries, operates as a specialty retailer and direct marketer of women's apparel, accessories, and shoes in the United States and Canada. At the end of the third quarter 2010, Talbots operated 584 Talbots brand stores in 46 states, the District of Columbia, and Canada.
In the precedent second-quarter, the Hingham, Massachusetts-based the company's net income was $941,000, or 1 cent a share, compared to a loss of $24.5 million, or 45 cents, in the prior-year quarter. On an adjusted basis, the company earned 13 cents a share in the second quarter. Revenue slipped 1.3% to $300.7 million from $304.6 million. Analysts, on average, expected the company to report earnings of 5 cents per share on revenue of $316.77 million.
Early in October, the company reduced its sales outlook, citing lower customer traffic. For the third quarter of fiscal 2010, Talbots said it now expects revenue to decrease by a low-single-digit percentage, compared with prior expectations for a low-single-digit increase. The company reiterated its expectations for third quarter adjusted earnings per share from continuing operations in the range of approximately 22 cents to 28 cents per share, excluding special items, compared to last year's adjusted earnings per share from continuing operations of 31 cents per share.
The company also reffirmed its expectations for full year adjusted earnings per share from continuing operations in the range of approximately 84 cents to 92 cents per share, excluding special items. This compares to an adjusted loss per share from continuing operations of 10 cents reported last year. This anticipated result is based on an expected top-line sales increase of approximately 1% compared to the prior year period, which is below the company's previous expectation for an increase of approximately low single digits.
Also in October, Talbots unveiled a three-year plan that includes closing 75 to 100 stores over the next three years, as it focuses on more upscale outlets to help grow revenue and improve its profit margin.
By the end of 2013, Talbots expects to achieve total sales in the range of approximately $1.4 billion to $1.5 billion, which would represent a compounded annual growth rate of approximately 4% to 6% from expected 2010 results. Gross margin is expected to increase by approximately 450 bps to 500 bps from expected gross margin results in fiscal 2010. Cash flow from operations is expected to increase to approximately $150 million in 2013.
Investors are expected to keenly follow the management's commentary about store traffic and the ongoing holiday season. The Friday after the Thanksgiving holiday marks the start of the crucial holiday shopping period.
In terms of stock performance, Talbots shares have gained nearly 20% since the beginning of the year.
Full Disclosure: None.
