US: Talbots Q1 profits improve as Sycamore talks end
- Net income increased 48.84% to $1.1m
- Sales down 8.4% to $275.9m on store closure plan
US women's wear retailer The Talbots Inc has reported improved first quarter results - as it revealed it has been unable to reach an agreement to sell the business to private-equity firm Sycamore partners.
The company said today (25 May) that the exclusivity agreement with Sycamore Partners has expired, with the private-equity firm "not prepared to execute a transaction at this time."
Talbots added that it remains open to pursuing a transaction with Sycamore Partners at $3.05 per share.
The retailer will also explore other strategic alternatives and continue to focus on executing its business plan.
The news came as net income rose to $1.1m over the first quarter ended 28 April against $739,000 in the same period of the prior year. Operating income increased 75% to US$5.6m, with adjusted operating income, excluding special items rising 38% to $10.5m.
Net sales, however, were down 8.4% to $275.9m, which the firm said was due in part to store closures in 2011. Consolidated comparable sales declined 3.8% over the year.
"We are pleased to have achieved profitability in the first quarter, driven by improved merchandise margin compared to the prior year period as well as strong inventory and expense management," said president and CEO Trudy Sullivan.
"Overall, we continue to focus on further enhancing our product, re-engaging with our core customer and executing our key strategic initiatives as the board continues to actively explore a full range of strategic alternatives."
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