Sector Snap: Specialty apparel gets leaner

Specialty apparel retailers have been among the hardest hit sectors as consumers cut back discretionary spending amid high food and gas prices, a housing slump and tightening credit.

Analysts say the moves are necessary but will do little in the face of slumping sales in stores open at least one year, a key retail metric known as same-store sales.

"Most specialty players are managing inventories very tightly the given current environment," said RBC Capital Markets analyst Howard Tubin. "I don't think it's going to generate positive same-store sales but it will help manage gross margin and profit."

Women's apparel retailer Talbots Inc. on Wednesday said first-quarter profit fell 69 percent, due to weak results from its Talbots Kids, Mens and U.K. noncore business, which Talbots is exiting. Results included a restructuring charge related to a strategic review.

Trudy F. Sullivan, Talbots president and chief executive of the Hingham, Mass.-based company, said inventory management boosted results at its namesake brand, but results were weaker at J.Jill, where same-store sales fell 20.2 percent.

Stifel Nicolaus analyst Richard Jaffe said J.Jill has had too high inventory levels and attempts to change that were "too little too late." But he praised results at Talbots' namesake brand.

"With lean inventory and a much more aggressive effort on markdowns, they have been able to actually improve profitability year over year," Jaffe said.

Talbots shares rose 51 cents, or 6.8 percent, to $7.95 during afternoon trading.

Meanwhile, Charming Shoppes Inc., operator of Layne Bryant, posted a first-quarter loss, as same-store sales fell 13 percent and revenue fell 8 percent. However, the Bensalem, Pa.-based company said same-store inventories were 13 percent lower at the end of the quarter compared with a year ago, and merchandise margins improved.