Slammed by a steep decline in same-store sales and heavy discounts, Talbots (NYSE:TLB) disclosed on Wednesday a deeper-than-expected second-quarter loss.
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The Hingham, Mass.-based womens apparel retailer also warned of more pressure in the current quarter and announced the ouster of its chief creative officer.
The bleak news fueled more selling in the companys stock, which have has nearly three-quarters of its value so far this year.
Talbots said it lost $37.4 million, or 54 cents a share, last quarter, compared with a profit of $521,000, or one cent a share, last quarter. Excluding one-time items, it lost 51 cents a share, trailing consensus estimates for a loss of 45 cents.
Sales declined 9.9% to $271.1 million, but that managed to surpass the Streets view of $263.4 million. Same-store sales tumbled 11.1%, while gross margins plunged to -12.6%, compared with 2.9%.
Our second quarter results reflect high levels of promotional and markdown activity, CEO Trudy Sullivan said in a statement. While we remain confident in our long-term strategic direction, in the near-term we are focused on delivering a more compelling, balanced merchandise assortment and driving improved top-line sales.
Talbots was cautious about the current quarter, saying sales and customer traffic continue to trend negative. Top-line sales have slumped 8% compared with the same period in 2010 and heavy markdowns are expected to continue.
While sales quarter-to-date remain under pressure, thus far in September our sales trends have meaningfully improved versus August and we are seeing better performance in those key merchandise categories where we focused on making adjustments to the product design, Sullivan said.
Talbots also announced the firing of Michael Smaldone, its chief creative officer, in an effort to improve customer acceptance. While the company looks for a replacement, Sullivan will assume chief creative duties.
Beaten-down shares of Talbots retreated on the results and guidance, sinking 5.93% to $2.38 ahead of Wednesdays opening bell. The companys stock had plummeted 70% on the year as of Tuesday.