Edit Metric
|
||||||||||||||||||||
Details
|
||||||||||||||
Talbots (TLB)Stock (Apparel Stores Industry, Fashion Industry Industry, Retail Industry)
[edit] Business and FinancialsTalbots is composed of two segments: Talbots and J. Jill.
Talbots decided to close its men's and children's businesses in January 2008, and has also closed twenty underperforming stores in order to better focus on its aforementioned core demographic.[4] Net income has been below expectations for the past five years, even becoming negative in 2007. The company's lackluster performance is attributed mainly to decreased consumer spending in response to an unstable economy, as well as tough competition with more attractive product offerings.
Despite the discontinuation of its men's and children's lines, Talbots has increased its number of stores for the past five years, thanks in part to its acquisition of J. Jill. Talbots' strategy for recovering from its profit slump involves focusing on only one group of consumers--professional, educated women over the age of 35. The firm is currently improving its image among this demographic by further developing its apparel; focusing on exclusive colors and fabrics, as well as fashion-forward design.[6] [edit] Key Trends and Forces[edit] Worsening of U.S. Economy Will Further Curb Consumer SpendingFears of a recession are leading consumers to be more conservative about their spending, causing many companies in the retail industry to see a decrease in sales. Talbots, however, has seen an increase in sales, with 2008 revenues growing from $388 million for Talbots and $86 million for J. Jill in the first quarter,to $436 million and $106 million in the second quarter, respectively. [7] [8] Although Talbots' revenues have increaed for the last two quarters, they are still much lower than last year's revenues for the same quarters. Before the state of the economy became so uneasy, middle-class consumers were more confident, with more money and more access to credit, meaning they were more likely to purchase luxury goods. With a recession looming, however, those same middle-class consumers have been holding back and buying less from luxury retailers, leading to the overall decrease in revenues from 2007 to 2008.[9] The quarterly increase, however, is due to Talbots' more affluent customers being relatively unfazed by recessionary fears, coupled with the company's decision to hold monthly sales instead of quarterly sales.[10] [edit] Credit Crunch Negatively Affects The Talbots, Inc.Many banks are trying to limit their risks due to the credit crisis. In April 2008 two of Talbots' lenders stopped a $265 million line of credit to the company. [11] Talbots relies on credit to purchase inventory and merchandise from overseas vendors. If it is unable to secure sufficient credit, the company will purchase less inventory, meaning it has fewer products to sell, leading to decreased revenues and profits.[12] Talbot's credit issues have resulted in its stock price decreasing by almost half in April 2008, from $12.83 to $7.83 per share. [edit] Aging Baby Boomer Population Increases Talbots' Target DemographicAs of 2005 there were 78.2 million baby boomers in the United States, of which about 40 million were women. With ages varying from 44 to 62, these women are part of Talbots' key demographic.[13] As baby boomer women move into the upper echelons of the professional world, and then retire, they will have more money to spend on luxury items, so Talbots is revamping its products and its image in order to best capitalize on this target demographic. [edit] Competition
AnnTaylor Stores (ANN) is a clothing retailer with stores throughout the entire United States and Puerto Rico. Its principal store, Ann Taylor, provides professional clothing, while Ann Taylor Loft provides casual clothing, both geared towards professional women. Limited Brands (LTD) owns a number of well-known brands, namely Victoria's Secret and Bath & Body Works. Victoria's Secret is a lingerie retailer, while Bath & Body Works focusees on beauty products.[19] In 2007 Limited Brands increased its line of credit to $1.5 billion.[20] Nordstrom (JWN) is an "affordable luxury" retailer that sells clothing, shoes, and accessories to individuals of both genders. It's target demographic is individuals between the ages of 25 and 54 who generate an income in excess of $100,000 per year. Chico's FAS (CHS) sells casual clothing to middle-aged women with moderate to high income. It also owns Soma, a lingerie store, and WH|BM, a brand that targets a younger demographic.[21] Among its closest competitors, Talbots' sales are lower than most, higher than only Chico's. The high discrepancy in sales is at least partly attributable to the fact that some retailers, such as Nordstrom and Limited Brands, Inc. serve a much larger clientele. Among the competitors that serve similar demographics of middle-aged women (Talbots, Ann Taylor, and Chico's), Talbots makes comparable revenues. In the past year, none of Talbots' competitors have seen a decrease in the amount of money they could borrow. Since Talbots' line of credit is substantially decreased, the amount of inventory it can purchase will decrease, meaning it will be less capable of competing with its main rivals.  Talbots2004 Data 2005 Data 2006 Data 2007 Data 2008 Data Most Recent Data Available [edit] References
|
The Shelf
|
Edit
History
Bookmark
