Talbots returns to profit in 2nd quarter, but offers weak 3rd-quarter outlook; shares fall

Talbots returns to 2Q profit, offers weak outlook

HINGHAM, Mass. — Women’s clothing seller The Talbots Inc. returned to a profit in the fiscal second quarter as the company cut costs to offset slightly lower revenue.

The company raised its yearly outlook on the results, but trimmed its revenue outlook due to the continued weak economy. It also offered third-quarter guidance below expectations and shares fell in premarket trading.

Net income for the three months ended July 31 totaled $941,000, or a penny per share, compared with a loss of $24.5 million, or 45 cents per share. Excluding one-time items, net income was 14 cents per share.

Revenue fell 1 percent to $300.7 million from $304.6 million, a year earlier.

Analysts polled by Thomson Reuters, on average, predicted net income of 5 cents per share on revenue of $313.9 million.

Women’s clothing sellers have cut costs and lowered inventory to offset weak sales during the recession and continued uncertain economy.

CEO Trudy F. Sullivan said the company continued to see double-digit increases in sales of full-priced items, “which is in line with our focus on improving margins through strong inventory management.”

The company now expects yearly net income for 84 cents to 92 cents per share, excluding one-time items. From prior guidance of 75 cents to 83 cents per share. Analysts expect net income of 83 cents per share.

But it now expects yearly revenue to rise in the low single digits, compared with prior guidance of a 3 percent to 5 percent rise.

For the third quarter, Talbots predicts net income of 22 cents to 28 cents per share. Analysts expect net income of 30 cents per share.

Shares fell $1.12, or 10 percent, to $9.99 in premarket trading.

(This version corrects net income.)