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8-K - FORM 8-K - TALBOTS INC | b82856e8vk.htm |
Exhibit 99.1
TALBOTS TO UPDATE INVESTORS ON COMPANYS TRANSFORMATION
AND THREE-YEAR STRATEGIC PLAN AT INVESTOR MEETING
AND THREE-YEAR STRATEGIC PLAN AT INVESTOR MEETING
Company Outlines Initiatives to Drive Long-Term Sales Growth and Increase Profitability
- Targets Top-Line Sales Growth of 4% to 6% (CAGR) from 2010 through 2013 -
- Expects to Achieve Adjusted Operating Income of Approximately 12% in 2013 -
- Targets Top-Line Sales Growth of 4% to 6% (CAGR) from 2010 through 2013 -
- Expects to Achieve Adjusted Operating Income of Approximately 12% in 2013 -
Company Updates Outlook for Third Quarter and Full Year Fiscal 2010
Hingham, MA, October 5, 2010 The Talbots, Inc. (NYSE: TLB) today announced that it will
provide an update on the Companys strategic initiatives, key growth opportunities, and three-year
financial outlook at its 2010 Investor Meeting being held today in New York City. The Company also
today provided an update on its third quarter and full year fiscal
2010 outlook.
Trudy F. Sullivan, Talbots President and Chief Executive Officer, said, We have made steady
progress in turning around the Company over the past few years and we have established a strong
track record of meeting our objectives. Looking forward, we will continue to build on our key
initiatives and are expecting to capitalize on opportunities to generate strong top- and
bottom-line growth. We are highly focused on the successful implementation of merchandise,
marketing and in-store strategies that will enable us to acquire new customers and solidify our
position with Talbots core customer. Further, we remain committed to operational excellence in all
business execution and to ensuring we are delivering long-term shareholder value.
To highlight Talbots turnaround execution and future growth opportunities at the Investor
Meeting, the Companys brand, merchandising, marketing, real estate, supply chain, and information
technology executives will discuss strategic initiatives in each of their business areas designed
to enable Talbots to progress into a new stage of top- and bottom-line growth.
Three-Year Strategic Plan
Talbots has embarked on the next phase of its turnaround plan initiated in 2007. Today,
Talbots continues to implement its strategic initiatives with significant improvements in its brand
position, merchandise, marketing, and operating and capital structure. Talbots updated strategic
plan begins with the Companys target customer, builds mechanisms to achieve growth, ensures
Talbots has the right infrastructure and people to execute, and is expected to provide enhanced
returns to shareholders.
The Company will focus on the following key areas:
| Understanding and meeting the needs of the target customer. | ||
| Continuing to shift brand perception within the marketplace and with the consumer by investing in innovative marketing strategies. |
| Accelerating the current business momentum and driving growth across all channels of the business through merchandising, store productivity, and direct channel initiatives. | ||
| Driving operational excellence and discipline in all business execution through continued focus on inventory management and enhancements to the Companys supply chain and IT systems. | ||
| Building a winning organization and culture. |
Goals for Fiscal 2013
Based on successfully executing the Companys three-year strategic plan, management is targeting
the following by the end of 2013:
| Total sales in the range of approximately $1.4 billion to $1.5 billion, which would represent a compounded annual growth rate (CAGR) of approximately 4% to 6% from expected 2010 results. | ||
| Gross margin to increase by approximately 450 bps to 500 bps from expected gross margin results in fiscal 2010. | ||
| Selling, general and administrative (SG&A) expenses to improve by approximately 100 bps to 150 bps from expected 2010 results. This would include an anticipated incremental marketing investment of approximately $60 million to $75 million for 2010 through 2013. | ||
| Adjusted operating income to be approximately 12% of sales, excluding special items. | ||
| Total capital expenditures to be approximately $60 million each year for the next three years to support strategic investments in store re-imaging, upscale outlet expansion, and information technology systems. | ||
| Rationalization of existing store base reflecting approximately 75 to 100 store closings. This will be achieved through optimization of lease expirations and lease renewal dates. | ||
| Cash flow from operations to increase to approximately $150 million in 2013. |
Updated Outlook for Third Quarter and Full Year Fiscal 2010
The Company reiterated its expectations for full year adjusted earnings per share from
continuing operations in the range of approximately $0.84 to $0.92 per share, excluding special
items. This compares to an adjusted loss per share from continuing operations of $0.10 reported
last year. This anticipated result is based on an expected top-line sales increase of
approximately 1% compared to the prior year period, which is below the Companys previous
expectation for an increase of approximately low single digits.
For the third quarter of 2010, the Company has also reiterated its expectations for adjusted
earnings per share from continuing operations in the range of approximately $0.22 to $0.28 per
share, excluding special items, compared to last years adjusted earnings per share from continuing
operations of $0.31 per share. This anticipated result is based on an expected top-line sales
decrease of approximately
low-single digits, which is lowered from its previously provided outlook of a top-line sales
increase of approximately low-single digits.
Ms. Sullivan concluded, We are pleased with our overall first half performance and the
successful launch in the third quarter of key initiatives, including an enhanced marketing
campaign, segmentation strategy and store-reimage program. While customer traffic in our stores in
the third quarter has been inconsistent, which is a reversal of the improving trends we saw in the
first half of the year, sales in our direct business continue to
trend positive quarter-to-date. That said, we do believe we are solidly positioned for the remainder of
the fall as well as the upcoming holiday season. Further, we continue to have confidence that we
have the right strategies in place to achieve long-term sustainable growth and profitability.
The above outlook for fiscal 2010 and fiscal 2013 is based on the Companys internal
assumptions and estimates, is subject to its accompanying forward-looking statement and is not a
guarantee of future performance.
Investor Meeting Webcast Details
Talbots Investor Meeting will begin at 8:30AM Eastern Time today and an audio webcast and
presentations will be broadcast live via the Internet in the Investor Relations section of the
Companys website at http://www.thetalbotsinc.com. A replay of the audio webcast and
presentations will be available in archived format following the meeting for a period of twelve
months.
The Talbots, Inc. is a leading specialty retailer and direct marketer of womens apparel,
shoes and accessories. At the end of the second quarter 2010, the Company operated 580 Talbots
brand stores in 46 states, the District of Columbia, and Canada. Talbots brand on-line shopping
site is located at www.talbots.com.
CONTACT: | The Talbots, Inc. Julie Lorigan Senior Vice President, Investor and Media Relations (781) 741-7775 FD Leigh Parrish and Evan Goetz Investor and Media Relations (212) 850-5651 or (212) 850-5639 |
Cautionary Statement and Certain Risk Factors to Consider
In addition to the information set forth in this press release, you should carefully consider
the risk factors and risks and uncertainties included in this Companys Annual Report on Form 10-K
and Quarterly Reports on Form 10-Q, as well as in this press release below.
This press release contains forward-looking information within the meaning of The Private
Securities Litigation Reform Act of 1995. These statements may be identified by such
forward-looking terminology as expect, achieve, plan, target, look, projected,
believe, anticipate, outlook, will, would, should, potential or similar statements or
variations of such terms. All of the information concerning our strategic initiatives and short
term and longer term financial expectations, future liquidity,
future financial performance and results, future credit facilities and availability, future
cash flows and cash needs, and other future financial performance and expectations or financial
position, as well as our assumptions underlying such information, constitute forward-looking
information. Our forward-looking statements are based on a series of expectations, assumptions,
estimates and projections about the Company, are not guarantees of future results or performance,
and involve substantial risks and uncertainty, including assumptions and projections concerning our
achievement of our strategic plan and existing and future initiatives, liquidity, internal plan,
regular-price and markdown selling, operating cash flows, and credit availability for all forward
periods. Our business and our forward-looking statements involve substantial known and unknown
risks and uncertainties, including the following risks and uncertainties:
| the continuing material impact of the volatility in the U.S. economic environment and global economic uncertainty on our business, continuing operations, liquidity, financing plans, strategic and operating initiatives and financial results, including substantial negative impact on consumer discretionary spending and consumer confidence, substantial loss of household wealth and savings, the disruption and significant tightening in the U.S. credit and lending markets and potential long-term unemployment levels; | ||
| the ability to achieve our 2010-2013 strategic plan; | ||
| the risk in successfully implementing and achieving the benefits of store segmentation, store reimage, store rationalization, and all other existing and future initiatives in the periods or at the levels expected; | ||
| the risk in timely responding to changes in customer preferences and customer buying patterns; | ||
| risks associated with upscale outlets initiatives and roll-out; | ||
| the ability to accurately estimate and forecast future regular-price and markdown selling, operating cash flows and other future financial results and financial position; | ||
| the satisfaction of all borrowing conditions under our credit facility including accuracy of all representations and warranties, no events of default, absence of material adverse effect or change and all other borrowing conditions; | ||
| any lack of sufficiency of available cash flows and other internal cash resources to satisfy all future operating needs and other cash requirements; | ||
| the ability to access on satisfactory terms, or at all, adequate financing and sources of liquidity necessary to fund our continuing operations and strategic initiatives and to obtain further increases in our credit facilities as may be needed from time to time; | ||
| the impact of the current regulatory environment and financial systems reforms on our business, including new consumer credit rules; | ||
| the success and customer acceptance of our merchandise offerings; | ||
| the risks associated with our appointment of an exclusive global merchandise buying agent, including that the anticipated benefits and cost savings from this arrangement may not be realized or may take longer to realize than expected; and the risk that upon any cessation of the relationship, for any reason, we would be unable to successfully transition to an internal or other external sourcing function; | ||
| the ability to continue to purchase merchandise on open account purchase terms at existing or future expected levels and with acceptable payment terms and the risk that suppliers could require earlier or immediate payment or other security due to any payment concerns; | ||
| the risks and uncertainties in connection with any need to source merchandise from alternate vendors; | ||
| any impact to or disruption in our supply of merchandise including from any current and any future increased political or other unrest in various Asian countries which are our sources of merchandise supply or any other disruption in our ability to adequately obtain alternate merchandise supply as may be necessary; |
| the ability to successfully execute, fund and achieve the expected benefits of supply chain initiatives, anticipated lower inventory levels, cost reductions and all current and future strategic initiatives; | ||
| any significant interruption or disruption in the operation of our distribution facility or the domestic and international transportation infrastructure; | ||
| the risk that estimated or anticipated costs, charges and liabilities to settle and complete the transition and exit from and disposal of the J. Jill business, including both retained obligations and contingent risk for assigned obligations, may materially differ from or be materially greater than anticipated; | ||
| any future store closings and the success of and necessary funding for closing underperforming stores; | ||
| the ability to reduce spending as needed; | ||
| any negative publicity concerning the specialty retail business in general or our business in particular; | ||
| the risk of impairment of goodwill and other intangible and long-lived assets; and | ||
| the risks and uncertainties associated with the outcome of litigation, claims, tax audits, and tax and other proceedings and the risk that actual liabilities, assessments and financial impact will exceed any estimated, accrued or expected amounts or outcomes. |
All of our forward-looking statements are as of the date of this press release only. In
each case, actual results may differ materially from such forward-looking information. The
Company can give no assurance that such expectations or forward-looking statements will prove to
be correct. An occurrence of or any material adverse change in one or more of the risk factors
or risks and uncertainties referred to in this press release or included in our periodic reports
filed with the Securities and Exchange Commission could materially and adversely affect our
continuing operations and our future financial results, cash flows, prospects, and liquidity.
Except as required by law, the Company does not undertake or plan to update or revise any such
forward-looking statements to reflect actual results, changes in plans, assumptions, estimates
or projections, or other circumstances affecting such forward-looking statements occurring after
the date of this release, even if such results, changes or circumstances make it clear that any
forward-looking information will not be realized. Any public statements or disclosures by us
following this release which modify or impact any of the forward-looking statements contained in
this release will be deemed to modify or supersede such statements in this release.
###
SEC Regulation G
Third quarter 2010, full year 2010 and 2013 Outlook and Financial Targets, GAAP to non-GAAP (adjusted) reconciling information
The Companys outlook for the third quarter 2010 and full year 2010 and financial targets for 2013
exclude the impact of merger-related costs, restructuring charges, impairment charges, the change
in tax estimate and the impact of the store re-image initiative. At this time, the Company cannot
reasonably estimate the impact that restructuring charges, impairment charges and the store
re-image initiative will have on operating income and income from continuing operations during
these periods. Merger-related costs for the third quarter 2010 and full year 2010 are anticipated
to be approximately $1.2 million and $29.3 million, respectively. The Company does not expect to
incur merger-related costs in 2013. The Company also does not expect any similar additional tax
items in the forward-looking periods, and the full year 2010 impact of the second quarter change in
estimate is anticipated to be $5.5 million.
The following historical non-GAAP information is referenced in managements comments on the third
quarter 2010 and full year 2010 outlook.
For the 52 weeks ended | For the 13 weeks ended | |||||||||||||||
January 30, 2010 | October 31, 2009 | |||||||||||||||
Amounts in thousands except per share amounts | ||||||||||||||||
(Loss) income from continuing operations |
$ | (25,308 | ) | $ | (0.47 | ) | $ | 15,464 | $ | 0.28 | ||||||
Merger-related costs |
8,216 | 0.15 | | | ||||||||||||
Restructuring charges |
10,273 | 0.19 | 389 | 0.01 | ||||||||||||
Impairment of store assets |
1,351 | 0.03 | 1,320 | 0.02 | ||||||||||||
Adjusted (loss) income from continuing operations |
(5,468 | ) | (0.10 | ) | 17,173 | 0.31 | ||||||||||