Women's clothing retailer Talbots Inc
Talbots said it will have to pick up the pace of promotions during the holiday season. The company saw inventory jump 11.3 percent from a year earlier, in part due to lower sales volume.
We believe the challenging and promotional environment will continue. To that end, we will stay nimble and have appropriately enhanced our promotional activity to best position ourselves for the remainder of this holiday season, Chief Executive Officer Trudy Sullivan said in a statement.
The increased inventory is the reverse of the problem Talbots had earlier this year, when it said it ran short of smaller sizes and certain sweaters in September.
For the fourth quarter, Talbots forecast a loss of 5 cents a share to a profit of 3 cents per share from continuing operations, with sales flat to down low single digits.
Analysts on average forecast earnings of 14 cents a share, according to Thomson Reuters I/B/E/S.
The company competes with AnnTaylor Stores Corp
Both AnnTaylor and Chico's reported better-than-expected results in their most recent quarters, sending shares up.
Chico's Chief Executive Dave Dyer said the business had positive momentum.
Talbots' income from continuing operations was $17 million or 24 cents a share in the third quarter ended October 30, compared with income from continuing operations of $15.5 million, or 28 cents a share, a year earlier.
Its third-quarter sales fell 3.2 percent and it expects its fourth quarter sales to be flat to down in the low single digit percentage range.
Sales at stores open at least a year, or same-store sales, fell 7.1 percent in the third quarter.
Traffic and sales demand over the Thanksgiving holiday weekend improved, Sullivan said.
Talbots shares were down $2.48 at $8.91 on Tuesday on the New York Stock exchange.
(Reporting by Helen Chernikoff; Editing by Derek Caney, Dave Zimmerman)