Talbots (NYSE: TLB) has decided to shut down two ancillary concepts that aren't helping the company pull itself together. That may be a wise move, but don't expect it to cure everything. The retailer's still got its work cut out for it.
Talbots said it will shut down 78 stores that target men and children. (You can be forgiven for forgetting there was ever a Talbots Mens or Talbots Kids -- I had.) A couple of months ago, Talbots hired a consultant to help it evaluate its brands, and it's not surprising that these offshoots got the strategic boot. According to Talbots, these concepts don't "demonstrate the potential to deliver acceptable long-term return on investment."
Of course, given Talbots' well-known emphasis on mature females, we might also be forgiven for snarkily wondering whether the retailer needed to hire a fancy consultant to figure this out. I'm also curious whether anyone brought up the ill-conceived nature of the company's J. Jill acquisition, which many of us suspected when the deal was announced.
It's certainly not unheard of for a struggling retailer to rethink its concepts. Gap (NYSE: GPS) revealed similar sentiments when it decided to axe Forth & Towne (although that was only an 18-month exercise in futility).
The company's smart to increase its focus on its core customers, but turning its ship around will still take some time. After all, Talbots also snuck a nugget into the release about lower-trending fourth-quarter sales for both Talbots and J. Jill. The company will also accumulate near-term expenses associated with the closures.
Unfortunately, this is more of the same for this company (and its shareholders). Furthermore, it seems obvious that many retailers targeting mature females have been missing the boat lately. Just witness the problems that Chico's (NYSE: CHS), Ann Taylor (NYSE: ANN), and Coldwater Creek (Nasdaq: CWTR) have also experienced.
In my recent piece on avoiding retail disaster in 2008, I noted that some of these women's retailers, struggling with turnarounds and spooked consumers (older customers are far more easily rattled than teen shoppers), probably aren't the best places to put investment money right now. Although a sharper focus is probably a good long-term move for Talbots, I'm not convinced the company will be able to get things back on track anytime soon.
Want to make money in up, down, and rollercoaster markets? Find out how. Claim your private invitation to a breakthrough new service from Motley Fool Co-founder David Gardner and team. Simply enter your email below.
Terms & Conditions
RSS Headlines
Fool UK