Apparel retailer Talbots Inc. (TLB), Monday reported a wider net loss for the fourth quarter, hurt by slumping demand amid customers due to the worsening economic conditions. The company also said it is not providing fiscal 2009 annual guidance, due to the substantial volatility and continued uncertainty in U.S. economic conditions. Further, Talbots said it has secured a new $150 million secured revolving loan facility from Aeon to boost its liquidity. Following the news, the company's shares lost more than 15% in the after-hours trading.
The Hingham, Massachusetts-based company posted a net loss of $366.5 million or $6.85 per share for the fourth quarter, compared to a loss of $171.4 million or $3.22 per share in the prior year quarter.
Loss from continuing operations was $136.3 million or $2.55 per share, compared to $10.3 million or $0.19 per share in the previous year quarter. The result for the latest quarter included a restructuring charge of $7.6 million or $0.14 per share, related to severance from the company's recent downsizing, and non-cash charge of $0.3 million or $0.01 per share, related to asset impairments.
Loss from continuing operations, before restructuring and impairment charges, widened to $128.4 million or $2.40 per share from $7.1 million or $0.13 per share in the year-ago quarter.
Fourth quarter net sales declined to $327.9 million from $427.7 million in the same quarter of last year. Retail store sales were $279 million, down from $361 million last year. Comparable store sales declined 24.6% for the latest quarter.
Trudy Sullivan, Talbots president and chief executive officer, said, Our fourth quarter results were affected by the steep decline in consumer spending resulting from the deterioration in U.S. economic conditions.
Further, Talbots said that Aeon Co. Ltd., which through its wholly owned subsidiary is the company's majority shareholder, has provided a new $150 million secured revolving loan facility to the company. This new loan supplements the company's existing $215 million committed working capital facilities.
The company also said that it is in discussions and has signed a non-binding letter of intent with Li & Fung Ltd., the global sourcing and trading firm based in Hong Kong, to mutually explore a potential relationship for Li & Fung to become Talbots primary global sourcing agent.
During the quarter, Talbots said it refinanced $200 million term loan to a semi-annual interest-only loan with Aeon, maturing in 2012, and paid off the J. Jill acquisition debt in full. The company also eliminated all financial covenant tests under all credit facilities.
Also, during the quarter, the company's board decided to immediately suspend quarterly dividend on its common stock indefinitely, and freeze pension plans in order to further improve liquidity. The company expects to save about $35 million from these actions in fiscal 2009. The company also eliminated about 370 corporate level positions across all locations, representing about 17% of its corporate headcount. It is expected to result in savings of about $22 million in fiscal 2009.
The company exited its non-core concepts, Talbots Kids, Talbots Mens and Talbots U.K. operations. It is pursuing the sale of the J. Jill brand to focus exclusively on the core Talbots brand female consumer. The company said it has identified approximately 16 Talbots locations to close in fiscal 2009.
For fiscal year 2008, Talbots reported a net loss of $560.7 million or $10.49 per share, compared to a loss of $188.8 million or $3.56 per share in the previous year.
Net loss from continuing operations was $144.5 million or $2.70 per share, compared to net income of $43 thousand or breakeven per share in the prior year. Adjusted net loss from continuing operations widened to $123.9 million or $2.32 per share, compared to net income of $0.3 million or $0.00 per share last year.
Annual net sales decreased to $1.5 billion from $1.7 billion in the preceding year.
For the first quarter, Talbots expects a loss per share from continuing operations to be in the range of $0.47 to $0.52, excluding restructuring and impairment charges. The company noted that the outlook assumes a continuation of the negative comparable store sales trends at about the same levels in the fourth quarter of fiscal 2008.
Further, the company said it is not providing fiscal 2009 annual guidance, due to the substantial volatility and continued uncertainty in U.S. economic conditions.
Talbots expects the current weakness in consumer traffic and spending to continue through fiscal 2009, particularly in the first half of the year.
Talbots closed Monday's regular trading session at $4.57, up 66 cents or 16.88%. However, in the after-hours, the shares lost 70 cents or 15.32%.
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