Thanks for Nothing, J. Jill

In another sign of continued tough times, Talbots (NYSE: TLB  ) said yesterday it plans to sell its J. Jill unit. For those of us who know this stock's corporate history over the years, and for any long-time Talbots shareholders out there, I'd venture to guess that a common response might be, "Good riddance."

Last week, I nominated Talbots as one of the World's Scariest Stocks and also took a trip down memory lane. In 2005, when J. Jill was still a stand-alone, publicly traded company, I nominated it as a Halloween Trick, only to be later shocked when Talbots agreed to buy it. Needless to say, that acquisition just hasn't done much of anything for shareholders or the company since, other than add a lot of debt to Talbots' balance sheet. (And at the time of the acquisition, both brands needed a makeover.)

I could call this the week of my "Thanks for Nothing" articles on acquisitions. Yesterday I found myself wishing Whole Foods Market (Nasdaq: WFMI  ) hadn't decided to buy out organic rival Wild Oats. Seriously, although they can be helpful, maybe investors should look at mergers and acquisitions with more skepticism than euphoria at the get-go.

After all, history often belies any rose-colored glasses regarding such hook-ups; as much as they often excite investors in the short term, it's not uncommon that these deals disappoint in terms of future growth, and sometimes are serious drags instead. Look no further than, say, Time Warner's (NYSE: TWX  ) join-up with AOL, or how about eBay's (Nasdaq: EBAY  ) pricey yet arguably fairly pointless acquisition of Skype, at least in terms of driving new revenue.

Shareholders might breathe a sigh of relief that Talbots plans to try to sell the J. Jill brand and stop distracting itself by trying to reinvigorate it. But here's the question, and it's a big one: Who's going to buy it? The brand needed help even before the consumer spending slowdown, and October retail comps in general made it clear that all of our worst conjectures about holiday spending look likely. The credit crunch won't help this, either.

Last but not least, Talbots withdrew its previous guidance for the second half of the year. When it comes to pulling its outlook, Talbots certainly isn't alone given the terrible macroeconomic environment, but since it's long been struggling to turn its business around and has an onerous amount of debt, I still consider Talbots one of the riskiest stocks in retail. Investors, beware.   

Whole Foods Market and eBay are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Alyce Lomax owns shares of Whole Foods Market. The Fool has a disclosure policy.


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  • Report this Comment On November 11, 2008, at 11:13 AM, IrishRedRose wrote:

    This is interesting, given that around 2005 is when J Jill went sharply downhill in terms of design originality and attractiveness. I've totally lost interest in their clothing...it's a shadow of its former self. Funny. And Talbots was always rather square and boring, but it's lost a lot of whatever charm it had as well. At any rate, I'd be very surprised to learn that the design team at J Jill DIDN'T change when Talbot's took over. They've been trying to keep creating in the same idiom, but failing quite dismally overall. The occasional attractive piece and a great size range and consistency of sizing, but that's about all that's left of a once original and very appealing line of clothing. OH WELL!!! Thanks fer nothin', Talbots. jeesh.

  • Report this Comment On November 13, 2008, at 11:06 AM, Jeffsdate wrote:

    J. Jill's marketing, catalog design and customer service have always been terrific. Jewelry, too, is one of their strong suits. But the poor fit of the clothes has always been a problem for me and many other over-35 women I know, who claim to like J. Jill but don't buy much there. All of their pants are too low-waisted, and most of their sweaters are too tight in the arms and too loose in the torso. The catalog photos often conceal the true shape of the clothes, so you spend your life returning things. Also, a few years ago they got away from solid, muted colors and semi-classic, simple shapes and started cluttering up their stuff with hideous prints, hippie patchwork and embroidery, all of which totally lost me. The measly 5% discount of their "Take 5" credit card is a joke, as are their "Free shipping on orders of $150 or more" promos. (Why should I have to spend a hefty $150 to get it?) Talbots, Chico's and L. L. Bean have WAY better discounts, promos and loyalty-card privileges.

    J. Jill has a lot of great ideas and I'll be sad if they fold, but they need major changes if they want to survive.

  • Report this Comment On November 21, 2008, at 10:19 PM, librarygal wrote:

    I agree that about 2 years ago J Jill clothing took a strange turn. I remember a "survey" they offered when I was shopping on line that now has me thinking, "oh, I see they changed designers"...What were they thinking? Speaking for myself and many of my contemporaries, J Jill used to be a place for nice updated styles for my age group that didn't look stuffy or boring. They tried to go for the working woman group and that didn't work at all. I remember this past summer being in a store in southern California where there were about 300 pairs of linen shorts in the area by the dressing room and the sales person saying, omg we have to get rid of these shorts...we should just give 2 pairs to everyone that comes in. Yep, that was a bad sign. Too much stock and not alot of style anymore. They should have stayed true to their customers. I'll miss it but not as much as if it had disappeared before this last few years of disappointing styles and downgraded quality.

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