After five straight quarters of losses, Talbots is about to report two straight quarters of profits, analysts say. The chain entered the recession millions of dollars in debt, thanks to overpaying for fellow mom chain J. Jill (they spent $517 million on it in early 2006 and sold it for $75 million last summer). But its merchandise was already stuffy, and sales were already declining. Sales only got worse during the recession, and then its majority shareholder, perhaps unable to bear the pain, decided to divest itself of its stake in the company.
Now, having completed a deal The Wall Street Journal calls “creative,” the retailer finds itself mostly debt-free. It’s ready to remodel some stores and reinvest in itself, because sometimes after a rough divorce nothing feels better than a face-lift! And then, hopefully, the hot young things will follow.
For a full recovery, Talbots needs to attract a customer that’s around 35 while not alienating its current customer.
Its image had gotten so old that in a customer survey a couple of years ago, women 65 years of age and older said the brand was for “someone older,” says [chief executive Trudy] Sullivan.
Wall Street looks fondly on how Talbots has been able to financially restructure and climb out of its crippling debt. That alone has brought shares up drastically, but to continue wowing analysts, the image makeover must succeed.
Talbots has stepped up its fashion quotient, with offerings that include a sequin-trimmed sweater and leopard-print-lined black booties. So far, it has had some hits and misses. Last spring, “ethnic” prints in bright colors including orange and lime green misfired.
Sounds like they went a little overboard — they don’t need to be all the rage on Bedford Avenue, they just need a 35-year-old who doesn’t think American Apparel is all the rage.