Women's wear retailer The Talbots Inc has revised payment terms with its major vendors after two major banks decided to cancel their lines of credit.

In a filing with the Securities and Exchange Commission earlier this week, the Hingham, Massachusetts-based retailer said its existing $135m letter of credit facility with HSBC would be reduced in increments and would not be renewed after 8 August.

It also said Bank of America has cancelled its $130m credit line.

Talbots said yesterday (16 April) that its currently available working capital lines of $165m are "expected to be sufficient" to run the company in 2008.

But it said major vendors, who account for around 75% of Talbots' offshore merchandise purchases, have agreed to "open account" terms with payment in 45 days.

The revised terms extend the settlement period to 45 days from 22 days on letter of credit purchases. This should add $40m to the company's 2008 operating cash flow it said.

Purchases from the remaining smaller vendors will be covered by a $50m letter of credit line - and it is talking with several financial institutions to supply this.

Talbots president and chief executive officer, Trudy F Sullivan, said: "While the credit and financial markets are in a state of considerable flux, we have revised most of our vendor relationships to maximise the company's financial flexibility.

"We are confident in the long-term benefits of these actions as we proceed with the execution of our strategic plan."

Talbots, which operates 1,149 stores under the Talbots name and 273 stores under the J Jill brand, is trying to turn around its operations.

In January, the retailer revealed plans to close 78 children's and men's apparel stores and instead focus on its core middle-aged female customer.

In its fourth quarter to 2 February, the company posted a loss of $171m, with sales down 8% to $587m.