Talbots' Frump Factor: Profits Rise, But Stores Should be More Anthropologie, Less Ann Taylor
In most companies, a 17.1 percent jump in third-quarter profits would set champagne corks popping. At Talbots' (TLB), CEO Trudy Sullivan and her team are taking a more cautious approach. That's a wise management decision because the women's retailer's recent makeover still hasn't captured more market share, and it's all their fault.
Sullivan told Wall Street analysts:
We expect the operating environment to remain challenging and highly promotional. We've made appropriate adjustments to our promotional activities to respond to the current retail trend. We need to remain nimble to effectively manage our inventory and drive sales.
Talbots squeezed its double-digit profits out of some serious penny pinching. Earlier this year, the Hingham, Mass.-based retailer arranged a deal that let it reduce its debt and buy out its largest shareholder, Japanese retail company Aeon (U.S.A.), which held a 54 percent stake.
After the "dream transaction" which lined the coffers with much-needed cash, Sullivan and company embarked on a mission to trim under-performing stores (a year after it sold off 204 of its 279 J. Jill stores to an affiliate of Golden Gate Capital), planning to close as many as 100 over the next two years.
The trimming also extended to Talbots apparel. Leaner silhouettes designed to appeal to younger, more fashion-forward women hit the racks while ads featuring 90s supermodel Linda Evangelista flogged such trendy threads as a leopard swing coat and slim capris.
Though fiscal prudence is a management must-do for the ailing chain, Talbots' fashion makeover still leaves much to be desired. I've reported on the assortments' being more copy cat than cool cat chic. And even the attempt to refresh its merchandising (even going so far as to take off the signature red doors!) took what could have been a golden opportunity to create an alluring browsing experience a la Anthropologie (URBN) and turned it into a ho-hum facsimile of Ann Taylor Loft et. al.
So is it any wonder that sales fell 3.2 percent, comps dipped 7.1 percent? Total inventory increased 11.3 percent to $184.7 million primarily due to early holiday receipts and lower than anticipated sales volume.
A lone bright spot was Talbots' outlet business. Now 27 stores strong, Sullivan noted that the upscale chain's sales averaged $500 a square foot.
With over two years of dedicated efforts to rise above frumpdom, it's a shame that Talbots is still floundering. At this point, Sullivan and her minions need to concentrate on identifying their customer. I mean really identify her, not just stick on an age label and call it done.
For example, one of Talbots' promotional videos flashes heavily J. Crew influenced images (including a model who looks like she's 25), bold titles (Ssseriously sssexy?!), and a soundtrack that I can only describe as faux punk. Are women who came of age in the 80s -- and now slipping between boardrooms and carpools -- supposed to relate to this? Until they can point to a woman and say, "that is our customer," any initiative won't hit the elusive sweet spot to make her buy, buy instead of say bye-bye.
Image via Talbots
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