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As it closes stores, Talbots sees more profits coming from its redesigned web site.
As it closes up to 100 of its 580 stores over the next three years, The Talbots Inc. is looking forward to shifting sales to the more profitable web channel, executives said in a conference call with investors this week.
“Our operating profits are significantly higher on the web,” Mike Scarpa, the retailer’s chief operating and financial officer, said during the conference call yesterday.
The multichannel women’s wear retailer, No. 107 in the Internet Retailer Top 500 Guide, expects to increase overall sales by 1% to about $1.3 billion in the current fiscal year, which runs through the end of January 2011. It also projects sales to grow at a compound annual growth rate of between 4% and 6% from 2010 to 2013 to a range of $1.4 billion to $1.5 billion.
Capitalizing on a web site redesign completed last year, Talbots expects to use the web channel to spark growth, executives said. The retailer will emphasize exclusive product categories in its direct channel—including an expanding catalog presence and the web—featuring swimwear and enhanced business suit products, while also building a strong presence on the web for women’s plus-size apparel.
Although store traffic has slowed during the third quarter compared to earlier in the year, Talbots says sales in the direct channel have been strong so far in the fiscal third quarter, which runs through the end of this month, Sullivan said on Tuesday.
For the second quarter ended July 31, Talbots reported:
- Web sales were $38.7 million, up by 3.2% from $37.5 million in the second quarter of 2009.
- Total sales declined year over year 1.3% to $300.7 million from $304.6 million.
Talbots is also increasing its brand awareness through paid search campaigns, optimizing its web content for indexing by search engines, increasing the amount of web content personalized for shoppers, and engaging in Facebook and other forms of social marketing, president and CEO Trudy Sullivan and other executives said in the conference call.