Talbots records sharp Q3 loss amid reports of CEO shakeup
Hingham, Mass. — Talbots Inc. reported Thursday a loss of $22 million for the third quarter, compared with a profit of $17 million in the year-ago period. It was the apparel retailer’s third loss in four quarters. Talbots has posted an annual loss in three of the last four years.
Talbot’s has outlined plans for cutting jobs, trimming employees’ hours and closing under-performing stores. A report in the Wall Street Journal on Thursday also said the company is in the hunt for a new president capable of replacing current CEO Trudy Sullivan. WSJ’s unidentified sources said that the board intents to keep Sullivan aboard until Jan. 2013, but may promote the new president sooner. Talbot’s has not commented on the information.
Revenue for the quarter fell 7% to $279.5 million from $299 million, though still beating Wall Street’s expected $271 million in revenue. In November, same-store sales fell 4%, and they fell 4% in the third quarter.
Sullivan said Thursday she is disappointed in the company’s recent performance. She has laid out more plans for a turnaround, including cost-cutting measures such as suspending national advertising and TV campaigns for the short term and trimming inventory. The company will also cut 9% of its corporate workers, equating to about 100 jobs. Talbots is closing underperforming stores, but remodeling premium stores and expanding its upscale outlets.
Charming Shoppes to sell off Fashion Bug, add 125 Lane Bryant stores
Bensalem, Pa. — Charming Shoppes reported Thursday that its loss in the 3Q narrowed to $13 million from a loss of $18.8 million a year earlier. Revenue in the quarter dropped to $429.7 million, from $463.6 million last year, and same-store sales decreased 4%.
The retailer said it is conducting a strategic review of its operations, which includes the divestiture of its Fashion Bug business and the expansion of its Lane Bryant brand.
“While we have made progress in improving Fashion Bug’s profitability, we believe that it does not fit within our future strategic plan,” said Anthony M. Romano, president and CEO.
Charming Shoppes has engaged Barclays Capital as its financial advisor to assist in the process, but has not yet given a timeline for the sale of Fashion Bug or commented on any other courses of action that could be taken after the strategic review.
As part of the growth of its Lane Bryant flagship brand, Romano said the company will add 125 new Lane Bryant locations and relocate 125 mall stores to power strip and lifestyle centers. It will close about 50 stores upon lease expiration. As part of the plan, it will also push the Cacique intimate apparel label and pursue innovative digital sales initiatives.
The store additions will expand the Lane Bryant footprint to approximately 900 stores, comprised of 750 full-line Lane Bryant stores and 150 Lane Bryant Outlet locations.
Kroger posts 32 consecutive quarters of comp sales gains
CINCINNATI, Ohio — Kroger posted its 32nd consecutive of same-store sales gains as the grocer continues to grab market share due to a combination of a customer service initiative and value pricing.
"On-going market share gains are a product of Kroger’s Customer First strategy, where the company focuses on driving cost savings to reinvest in its four keys: prices, people, products and shopping experience," said Charles Grom, Deutsche Bank research analyst. "We believe the company has been particularly focused on investing in price and driving a pricing gap with conventional competitors. … The company’s lower prices are increasingly important to today’s more value-focused consumer."
During a recent price survey conducted by Credit Suisse in the Chicago and Dallas markets, Walmart has been widening its price gab between competitors with two exceptions — one of them being Kroger (the other being Target).
Kroger on Thursday reported a third-quarter sales increase of 10.3% to $20.6 billion, including fuel. For the period ended Nov. 5, total sales excluding fuel were up 5.1% over last year, the grocer reported.
Identical supermarket sales, without fuel, increased 5% in the third quarter over the same period last year.
Coming out of the third quarter, Kroger increased its diluted earnings per share guidance to $1.95 to $2.00 for the full year. Previously, the range was $1.85 to $1.95. The company also raised the low end of its identical supermarket sales growth guidance, excluding fuel, to 4.5% to 5% for the year. Previously, identical supermarket sales were expected to range from 4% to 5%.
Kroger also is bullish looking ahead to 2012, in part because of the generic wave that’s coming. "In terms of pharmacy, we’re just delighted with our trend and where we are," said Rodney McMullen, Kroger’s president and COO. "As you look out to 2012, there’s a lot of major drugs that will move out to generics. … The growth profit rate will be helpful."