The Talbots Inc. is cutting more staff and implementing a $150 million cost reduction plan, but also going ahead with plans to update its e-commerce site.
To cope with sagging sales, Talbots, No. 64 in the Internet Retailer Top 500 Guide, is cutting 370 corporate jobs, or 17% of its work force, suspending matching 401(k) payments, eliminating all merit pay increases and further consolidating store and marketing operations.
But Talbots also is going ahead with some business development and infrastructure improvement projects, including an upgrade of Talbots.com. “The company’s 2009 planned capital expenditures will support the rollout of its new upscale outlet stores, the platform refresh of its e-commerce site, and renovation and refurbishment of certain of its existing store base,” Talbots says.
Talbots, which operates its own e-commerce platform, will overhaul its web site despite a drop in direct sales. In the fourth quarter, direct sales for Talbots dropped 26.9% to $49 million from $67 million in Q4 of 2007. With the web accounting for about 59% of direct sales, Q4 e-commerce revenue dropped year over year by 54.8% to $28.9 million from $64 million. For the 13 weeks ended Jan. 13, 2009, comparable stores dropped 24.6% while total revenue declined to $328 million from $428 billion in Q4 of 2007.
For the full year, web sales for Talbots decreased 39.7% to $134.7 million from $223.4 million while comparable store sales declined 14.2%. Total sales declined 12.4% to $1.49 billion from $1.70 billion in 2007. The preliminary sales results include just the Talbots brand, while 2007 totals include sales for Talbots and J. Jill, which the company put up for sale in November. Talbots no longer reports J. Jill numbers in its earnings releases.
Talbots will release its full-year financials in March.
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