Women's clothing retailer Talbots Inc reported a surprise quarterly profit on cost cuts and eased concerns regarding its ability to pay down debt, sending its shares up 7 percent.

The retailer said it will reduce its debt by about $330 million through its acquisition of BPW Acquisition Corp and has a new $200 million senior secured revolving credit facility from GE Capital.

Talbots said its third-quarter net income from continuing operations was $15.5 million, or 28 cents a share, compared with $14.8 million, or 28 cents a share, a year earlier.

Excluding items, the profit was 30 cents a share. Analysts on average were expecting a loss of 14 cents a share, according to Thomson Reuters I/B/E/S.

Total sales decreased 13.5 percent to $308.9 million.

Talbots has managed inventory tightly, cut staff and streamlined operations as it tries to bring back shoppers over the age of 35.

(Reporting by Dhanya Skariachan, editing by Dave Zimmerman)