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As part of its Q3 earnings, Talbots announced it will begin looking for buyers for J. Jill, which Talbots acquired in a $517 million deal in February 2006. Overall web sales for Talbots dropped by 13.4% in Q3 while total sales declined by 13.8%.
The Talbots Inc. and J. Jill will no longer be an ensemble.
As part of its third quarter earnings announcement, Talbots, No. 64 in the Internet Retailer Top 500 Guide, announced it will begin looking for buyers for J. Jill, which Talbots acquired in a deal valued at $517 million in February 2006. "We have made great strides in reenergizing the Talbots brand and are encouraged by both our existing and lapsed customers` response to our product and marketing efforts. In light of the current macro-economic environment, we therefore feel it is a strong move to focus solely on executing the successful turnaround of our core brand,” says Talbots CEO Trudy F. Sullivan. “While we have made solid progress in improving the J. Jill brand`s operation, we have made the strategic decision to pursue its sale." Talbots didn’t disclose an asking price for J. Jill or if any potential buyers have submitted bids.
At the time of the merger, Talbots had hoped to create one of the biggest multi-channel brands of upscale women’s clothes and accessories. Talbots also saw the acquisition as a way to attract affluent female shoppers, especially women 35 and younger. But J. Jill wasn’t meeting expectations. Through the first six months of the year, J.Jill store sales had decreased by 9.2% to $145.9 million from $160.7 million in the prior year, Talbots says in a recent public financial filing.
The announcement of plans to sell the J.Jill brand comes in the wake of another disappointing quarter for Talbots. Web sales for Talbots decreased by 13.4% to $31.6 million in Q3 from $36.5 million in Q3 of 2007. Total revenue and retail store revenue also dropped by 13.8% and 12.2%, respectively. Total sales dropped year over year to $357 million from $414 million. For the quarter Talbots posted store sales of $303 million vs. $345 million in the prior year. Direct marketing sales, which include catalog and web sales, dropped by 21.7% to $54 million in the third quarter from $69 million in the previous year. “This is clearly a very difficult economic cycle,” says Sullivan. “In the near-term, we continue to minimize discretionary spending, tightly control our inventory, and continue to drive further improvements in working capital as we focus on enhancing our cash flow to fund the successful turnaround of our company and pay down debt."
For the first three quarters of the year, Talbots posted web sales of $108.6 million vs.$103.8 million in the prior year, an increase of 4.6%. Overall sales for the three previous quarters totaled $1.16 billion, a drop of 9.4% from sales of $1.28 billion in the prior year. Store sales are down year over year by 9% to $983 million from $1.08 billion. Direct marketing sales decreased for the first three quarters by 6.1% to $184 million from $196 million.