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Weak 1st-quarter guidance sinks Talbots

Shares of Talbots Inc. plunged Tuesday, after the women's apparel retailer said it doubled its fourth-quarter loss and issued first-quarter guidance below expectations.
/ Source: The Associated Press

Shares of Talbots Inc. plunged Tuesday, after the women's apparel retailer said it doubled its fourth-quarter loss and issued first-quarter guidance below expectations.

Its stock lost $1.12, or 24.5 percent, to $3.45 in afternoon trading. The stock has traded between $1.19 and $17.97 during the past 52 weeks.

Hingham, Mass.-based Talbots said late Monday fiscal fourth-quarter loss more than doubled, while revenue fell 23 percent to $328 million. Stripping out one-time items, Talbots' adjusted loss from continuing operations came to $1.17 per share, widely missing Wall Street's target of a 65-cent loss.

Women's apparel retailers have been among the hardest hit in the retail sector amid a consumer spending drop off due to a perceived lack of fashionable offerings and because women generally cut back on themselves ahead of their families.

The company did not provide yearly guidance due to the weak environment but said it expects a first-quarter loss between 47 cents and 52 cents per share, excluding one-time items.

Analysts polled by Thomson Reuters, on average, predict break even per share in the first quarter. Analysts typically exclude one-time items.

Talbots has been working to improve its merchandise selection, but one analyst said that wasn't enough.

"While we are encouraged by the improved contemporary aesthetic of the revamped merchandise with an increased focus on novelty and more appropriate pricing, we believe consumer reaction remains muted as evidenced by the lack of translation from aesthetic improvements to retail sales and new customer acquisition," wrote Wedbush Morgan analyst Betty Chen in a note to investors. She rates the company "Hold."

She said that while Talbots is making progress in selling its J. Jill brand and has sufficient liquidity, "we continue to look for a sustainable return to sales growth and earnings profitability before becoming more aggressive with shares."