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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MAY 3, 2003

Commission file number: 1-12552

THE TALBOTS, INC.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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INDEX TO FORM 10-Q

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PART I - FINANCIAL INFORMATION

               Item 1. FINANCIAL STATEMENTS

               THE TALBOTS, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
               FOR THE THIRTEEN WEEKS ENDED MAY 3, 2003 AND MAY 4, 2002
                (Dollar amounts in thousands except per share data)

See notes to consolidated financial statements.

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THE TALBOTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (unaudited)
MAY 3, 2003, FEBRUARY 1, 2003 AND MAY 4, 2002
(Dollar amounts in thousands except share data)

See notes to consolidated financial statements.

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THE TALBOTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
FOR THE THIRTEEN WEEKS ENDED MAY 3, 2003 AND MAY 4, 2002
(Dollar amounts in thousands)

See notes to consolidated financial statements.

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THE TALBOTS, INC. AND SUBSIDIARIES

1.

OPINION OF MANAGEMENT

With respect to the unaudited consolidated financial statements set forth herein, it is the opinion of management of The Talbots, Inc. and its subsidiaries (the “Company”) that all adjustments, which consist only of normal recurring adjustments necessary to present a fair statement of the results for such interim periods, have been included. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Because of the seasonality of the specialty retail business, operating results of the Company on a quarterly basis may not be indicative of operating results for the full year. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended February 1, 2003, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. All significant intercompany accounts and transactions have been eliminated in consolidation.

	Certain prior year amounts have been reclassified to conform to current year classifications.

2.

FEDERAL AND STATE INCOME TAXES

	The Company has provided for income taxes based on the estimated annual effective rate method.

3.

COMPREHENSIVE INCOME

	The following is the Company’s comprehensive income for the periods ended May 3, 2003 and May 4, 2002:

4.

STOCK-BASED COMPENSATION

	The Company accounts for stock-based compensation awards to employees using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” which has not required the Company to record any

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compensation expense. Had the Company used the fair value method to value compensation, as set forth in SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company’s net income and net income per share would have been reported as follows:

     The fair value of options on their grant date is measured using the Black Scholes option pricing model. The estimated weighted average fair value of options granted during the thirteen weeks ended May 3, 2003 and May 4, 2002 were $11.44 and $20.05 per option, respectively. Key assumptions used to apply this pricing model are as follows:

     The option pricing model used was designed to value readily tradable stock options with relatively short lives and no vesting restrictions. In addition, option valuation models require the input of highly subjective assumptions including the expected price volatility. Because the options granted to employees are not tradable and have contractual lives of ten years and changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the models do not necessarily provide a reliable measure of fair value of the options granted under the Company’s equity compensation plans.

     During the first quarter of fiscal 2003, the Company issued 307,125 restricted shares with a total market value of $7.7 million to members of Company management under its 2003 Stock Based Incentive Plan.

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5.     NET INCOME PER SHARE

     The weighted average shares used in computing basic and diluted net income per share are presented below. Options to purchase 2,555,698 and 2,454,666 shares of common stock were outstanding during the thirteen-week periods ended May 3, 2003 and May 4, 2002, respectively, but were not included in the computation of diluted net income per share because the options’ exercise prices were greater than the average market prices of the common shares.

6.      SEGMENT INFORMATION

     The Company has segmented its operations in a manner that reflects how its chief operating decision-maker reviews the results of the operating segments that make up the consolidated entity.

     The Company has two reportable segments, its retail stores (the “Stores Segment”), which include the Company’s United States, Canada and United Kingdom retail store operations, and its catalog operations (the “Catalog Segment”), which includes both catalog and internet operations.

     The Company’s reportable segments offer similar products; however, each segment requires different marketing and management strategies. The Stores Segment derives its revenues from the sale of women’s, children’s and men’s classic apparel, accessories and shoes, through its retail stores, while the Catalog Segment derives its revenues through its approximately 26 distinct catalog mailings and through its e-commerce site at www.talbots.com.

     The Company evaluates the operating performance of its identified segments based on a direct profit measure. The accounting policies of the segments are generally the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K, except as follows: direct profit is calculated as net sales less cost of goods sold and direct expenses, such as payroll, occupancy and other direct costs. Indirect expenses are not allocated on a segment basis; therefore, no measure of segment net income or loss is available. Assets are not allocated between segments; therefore, no measure of segment assets is available.

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The following is the Stores Segment and Catalog Segment information for the thirteen weeks ended May 3, 2003 and May 4, 2002:

The following reconciles direct profit to consolidated income before taxes for the thirteen weeks ended May 3, 2003 and May 4, 2002:

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis should be read in conjunction with the consolidated financial statements of the Company and the notes thereto appearing elsewhere in this document.

RESULTS OF OPERATIONS

     The following table sets forth the percentage relationship to net sales of certain items in the Company’s consolidated statements of earnings for the fiscal periods shown below:

THE THIRTEEN WEEKS ENDED MAY 3, 2003 COMPARED TO THE THIRTEEN WEEKS ENDED MAY 4, 2002 (FIRST QUARTER)

     Net sales in the first quarter of 2003 increased by $3.7 million or 0.9%, to $395.0 million, compared to $391.3 million for the first quarter of 2002. Operating income was $47.7 million in the first quarter of 2003 compared to $56.8 million in the first quarter of 2002, a decrease of $9.1 million, or 16.0%.

     Retail store sales in the first quarter of 2003 increased $7.5 million or 2.3%, to $329.2 million, compared to $321.7 million during the first quarter of 2002. The increase in store sales is primarily due to sales from the 31 net new stores opened in the first quarter of 2003 and the 58 net non-comparable stores that were opened in the last three quarters of 2002. This was partially offset by a decline in comparable stores sales of 4.3% in the first quarter of 2003 due to the continued sluggish retail environment. Comparable stores are those that were open for at least one full fiscal year. When a new Talbots Petites store, Woman store or Accessories & Shoes store is opened adjacent to or in close proximity to an existing Misses store which would qualify as a comparable store, such

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Misses store is excluded from the computation of comparable store sales for a period of 13 months so that the performance of the full Misses assortment may be properly compared. The percentage of the Company’s net sales derived from its retail stores increased to 83.3% in the first quarter of 2003 compared to 82.2% in the first quarter of 2002 primarily due to a 5.5% decline in catalog sales during the first quarter of 2003 compared to the same period in 2002.

     Catalog sales in the first quarter of 2003 decreased by $3.8 million, to $65.8 million, a decrease of 5.5% from the first quarter of 2002. The decrease in catalog sales was primarily due to a planned reduction in catalog circulation. In anticipation of continued softening customer demand, total catalog circulation was reduced by 3.4% and pages circulated were reduced by 10.6%. This was partially offset by an increase in catalog per-page productivity of 5.2%. The percentage of the Company’s net sales derived from its catalogs decreased to 16.7% in the first quarter of 2003 compared to 17.8% in the first quarter of 2002.

     Because the Company sells a wide range of products, which by their nature are subject to constantly changing business strategies and competitive positioning, it is not possible to attribute changes in retail sales or catalog sales to specific changes in prices, changes in volume or changes in product mix.

     Cost of sales, buying and occupancy expenses increased as a percentage of net sales to 58.3% in the first quarter of 2003 from 56.5% in the first quarter of 2002 due to negative leverage on occupancy and buying costs resulting from negative comparable store sales and the additional occupancy expense associated with the 31 net new stores in the first quarter of 2003 and 58 net non-comparable stores that opened in the last three quarters of 2002. This was partially offset by an increase in merchandise gross margin achieved through both higher markon due to improved sourcing arrangements and markdown selling that resulted in better overall margins. Deeper percentage markdowns were initially taken on mid-season clearance merchandise, which helped improve customer traffic during the sale period, moved the product earlier and ultimately produced higher merchandise margins on clearance merchandise than would have been achieved otherwise.

     Selling, general and administrative expenses as a percentage of net sales increased to 29.6% in the first quarter of 2003, as compared to 29.0% for the first quarter of 2002. Store operating expenses, as a percent of sales, increased due to negative comparable store sales. In total dollars, selling, general and administrative expenses were higher due to store operating costs associated with the increased number of stores and additional costs related to the return of television advertising to the spring marketing program. Offsetting some of this increase was a reduction in catalog production costs associated with the reduced catalog circulation and increased finance charge revenue on the Talbots charge card. Customer usage of the Talbots charge card increased to 45.2% of sales in the first quarter of 2003 from 42.0% in 2002.

     Interest expense, net, decreased to $0.7 million in the first quarter of 2003 from $0.8 million in 2002. This decrease is due to lower interest rates on borrowings. The average level of debt, including short-term and long-term bank borrowings, was $134.3 million in the first quarter of 2003 compared to $131.1 million in the first quarter of 2002. The average interest rate, including interest on short-term and long-term bank borrowings, was 2.2% in the first quarter of 2003 as compared to

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2.8% in the first quarter of 2002.

     The effective tax rate for the Company was 37.5% for both the first quarter of 2003 and the first quarter of 2002.

LIQUIDITY AND CAPITAL RESOURCES

     The Company’s primary sources of working capital are cash flows from operating activities and a line-of-credit facility from five banks, with maximum available short-term borrowings of $125.0 million. At May 3, 2003, the Company had $9.0 million outstanding under this facility and at May 4, 2002, $7.5 million was outstanding. Additionally, the Company has a revolving credit facility with four banks totaling $100.0 million. At May 3, 2003 and May 4, 2002, the Company’s borrowings under this revolving credit facility were $100.0 million. Also, the Company has two letter-of-credit banking agreements totaling $200.0 million, which it uses primarily for the purchase of merchandise inventories. At May 3, 2003 and May 2, 2002, the Company held $82.6 million and $66.4 million, respectively, in purchase commitments. The Company’s working capital needs are typically at their lowest in the spring and peak during the fall selling season.

     In the first quarter of 2003, cash and cash equivalents decreased by $19.7 million compared to an increase of $23.1 million in the first quarter of 2002. Primarily contributing to the decrease in cash and cash equivalents was a decrease in net cash provided by operating activities and an increase in stock repurchases.

     The decrease in cash from operating activities was primarily due to a decrease in net income and an increase in merchandise inventory of $29.0 million. The Company continued to focus on managing inventory levels throughout the quarter. However, at the end of the first quarter, inventory balances increased from year-end and from prior year. This increase was due to the timing of spring inventory receipts, increased store inventory associated with new stores and higher catalog inventory to provide better fulfillment of catalog orders.

     Capital expenditures, net of disposals, for the first quarter of fiscal 2003 were $22.2 million compared to $28.2 million in the first quarter of fiscal 2002. The Company used approximately $19.7 million and $23.2 million in the first quarter of fiscal 2003 and 2002, respectively, for constructing new stores and expanding and renovating existing stores. During the first quarter of fiscal 2003, the Company opened 33 new stores compared to 28 in the first quarter of fiscal 2002. For the remainder of the fiscal year, the Company currently anticipates approximately $76.1 million in additional capital expenditures for the opening of new stores and expanding and renovating existing stores, for further enhancements to the Company’s computer information systems and for continued renovations to the Company’s corporate facilities.* The actual amount of such capital expenditures will depend on the number and type of stores and facilities being opened, expanded and renovated, and the schedule of its capital expenditure activity during the remainder of fiscal 2003.

     During the first quarter ended May 3, 2003, the Company repurchased $24.9 million, or 924,356 shares, of its common stock under its stock repurchase program at an average price of

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$26.92 per share. These repurchases were made under a stock repurchase program voted by the Company’s Board of Directors in October 2002 allowing the Company to purchase an aggregate of $50.0 million in stock, from time to time, over a two year period. As of May 3, 2003, the Company had $25.1 million remaining under this authorization.

     During the first quarter ended May 4, 2002, the Company repurchased $16.5 million, or 450,000 shares, of its common stock under an earlier $50.0 million stock repurchase authorization at an average price of $36.57 per share.

     The Company’s primary ongoing cash requirements are currently expected to be for the financing of working capital buildups during peak selling seasons, capital expenditures for new stores and the expansion and renovation of existing stores and facilities, the purchase of treasury shares and the payment of any dividends that may be declared from time to time. For the current and next fiscal years, the Company believes its cash flows from operating activities and funds available to it under credit facilities will be sufficient to meet its capital expenditures and working capital requirements, including its debt service payments.*

     The payment of dividends and the amount of dividends, if any, will be determined by the Board of Directors and will depend on many factors, including earnings, operations, financial condition, capital requirements and general business outlook. On May 22, 2003, the Company’s Board of Directors approved an increase in the quarterly dividend to $0.10 per share payable on June 16, 2003 to shareholders of record as of June 2, 2003.

     A significant portion of the Company’s merchandise is manufactured overseas. Although the Company has not seen a significant impact to date, the current geopolitical situation in the Middle East and other geographic areas, along with the outbreak of severe acute respiratory syndrome (SARS), may have an impact on the Company’s sourcing operations in the future in varying degrees. Both the likelihood of such occurrences and their overall effect upon the Company are difficult to predict and the Company has and will take all appropriate measures to minimize the impact of such occurrences.*

     The combination of a low interest rate environment and the poor performance of the equity markets continue to have an adverse impact on the funded status of the Company’s non-contributory defined benefit pension plan (the “Plan”). Management continues to monitor interest rates and Plan asset returns and, if required, anticipates adjusting plan assumptions accordingly. If interest rates continue to decline, additional charges to equity and expense may be required along with additional cash funding.

Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The market risk inherent in the Company’s financial instruments and in its financial position represents the potential loss arising from adverse changes in interest rates. The Company does not enter into financial instruments for trading purposes.

     At May 3, 2003, the Company has variable rate borrowings outstanding of $100.0 million

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under its revolving credit agreements and $9.0 million in short-term borrowings, which approximate their fair market value. A hypothetical 10% adverse change in interest rates for this variable rate debt would not materially affect the Company’s results of operations or cash flow for a 13-week period.

     The Company enters into certain purchase obligations outside the United States, which are predominantly settled in U.S. dollars, and, therefore, the Company has only minimal exposure to foreign currency exchange risks. The Company does not hedge against foreign currency risks and believes that the foreign currency exchange risk is immaterial. In addition, the Company opened two stores in Canada and no stores in the United Kingdom during the 13 weeks ended May 3, 2003. The Company believes its foreign currency translation risk is minimal, as a hypothetical 10% strengthening or weakening of the U.S. dollar relative to the applicable foreign currency would not materially affect the Company’s results of operations or cash flow.

Item 4.   CONTROLS AND PROCEDURES

     The Company’s principal executive officer and principal financial officer have evaluated the Company’s disclosure controls and procedures as of a date within 90 days of the filing date of this Form 10-Q and believe the disclosure controls and procedures to be effective. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these internal controls subsequent to the date of their evaluation, nor were any significant deficiencies or material weaknesses in the Company’s internal controls found.

The foregoing contains forward-looking information within the meaning of The Private Securities Litigation Reform Act of 1995. The statements may be identified by an “asterisk” (“*”) or such forward-looking terminology as “expect,” “look,” “believe,” “anticipate,” “may,” “will,” or similar statements or variations of such terms. All of the “outlook” information constitutes forward-looking information. The specialty apparel retail business is an evolving and highly competitive marketplace and such forward-looking statements involve material known and unknown risks and uncertainties as to future events which may or may not occur, including levels of sales, effectiveness of the Company’s brand awareness and marketing programs, effectiveness and profitability of new concepts, effectiveness of its e-commerce site, store traffic, acceptance of Talbots fashions, appropriate balance of merchandise offerings, the Company’s ability to sell its merchandise at regular prices as well as its ability to successfully execute its major sale events including the timing and levels of markdowns, retail economic conditions including consumer spending, consumer confidence, a continued highly uncertain economy and a volatile stock market, the impact of geopolitical concerns, the potential impact of the SARS health concerns, particularly on the Company’s manufacturing and sourcing operations in Asia, and the impact of a continued highly promotional retail environment. In each case, actual results may differ materially from such forward-looking information. Certain other factors that may cause actual results to differ from such forward-looking statements are included in the Company’s Current Report on Form 8-K dated October 30, 1996 filed with the Securities and Exchange Commission (a copy of which may also be obtained from the Company at 781-741-4500) as well as other periodic reports filed by the Company with the Securities and Exchange Commission and you are urged to consider such factors. In light of the uncertainty inherent in such forward-looking statements, you should not consider their inclusion to be a representation that such forward-looking matters will be achieved. The Company assumes no obligation for updating any such forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

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PART II - OTHER INFORMATION

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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I, Arnold B. Zetcher, certify that:

     1.      I have reviewed this quarterly report on Form 10-Q of The Talbots, Inc. (the “Registrant”);

     2.      Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

     3.      Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

     4.      The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

               (a)      designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

               (b)      evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

               (c)      presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

     5.      The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

               (a)      all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

               (b)      any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

     6.      The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 16, 2003

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I, Edward L. Larsen, certify that:

     1.           I have reviewed this quarterly report on Form 10-Q of The Talbots, Inc. (the “Registrant”);

     2.           Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

     3.           Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

     4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

                   (a)      designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

                   (b)      evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

                   (c)      presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

     5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

                   (a)      all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

                   (b)      any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

     6.           The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 16, 2003

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