Talbots is hovering around a 1% loss this morning after downwardly revising its profit outlook for the fall season. TLB now expects a third-quarter loss in the range of 20 to 25 cents per share (including a one-time expense of 7 cents per share relating to executive compensation and consulting fees). Third-quarter same-store sales are expected to slip in the negative high single-digit range, with declines coming from both the Talbots and J. Jill brands.

Looking ahead to the fourth quarter, Talbots is forecasting a per-share loss of 5 cents to 10 cents, including one-time expenses totaling 9 cents. Fourth-quarter same-store sales are expected to drop in the negative mid-single-digit range, with flat-to-slightly-higher sales at J. Jill partially offsetting a mid-single-digit decline for Talbots.

President and CEO Trudy Sullivan said, We are very disappointed in our quarter-to-date performance. Our results have been significantly impacted by weaker than expected Talbots brand store sales, particularly during the important mid-season sale, which started in

late September. Talbots attributes some of its sales weakness to increasingly conservative consumer spending habits.

Previously, Talbots had forecast fall-season earnings of 42 to 48 cents per share, including a one-time compensation expense of 8 to 10 cents per share. Heavy pessimism from Wall Street may help to explain why TLB has already significantly narrowed its early loss in today's trading; the equity has not a single buy recommendation from brokerage firms, and more than 29% of its available float has been sold short.