Talbots (NYSE: TLB) shares spiked today on an utterly abysmal quarter. Of course, it's pretty easy for a stock to spike when it's in low single-digit territory.
The retailer's net loss for the quarter was $167.2 million, or $3.13 per share, which includes charges related to discontinued operations. Its net loss from continuing operations (remember, Talbots has gotten rid of the men, kids, and U.K. concepts, and it also plans to sell J. Jill, which has now been reclassified as discontinued operations) was $14.8 million, or $0.28 per share, and that figure missed analysts' expectations by $0.06 per share.
On the revenue side, sales fell 13.7% to $357.3 million, and same-store sales dropped 13.9%. The retailer declined to give fourth-quarter guidance, saying it expects "the environment to remain difficult and volatile."
If there's any element investors may find remotely comforting, it's that Mizuho Corporate Bank and Sumitomo Mitsui Banking Corp. agreed to convert their existing uncommitted working capital lines to committed working capital lines. This alleviates concern that this debt-laden retailer could face an imminent liquidity crunch, which would certainly have been a death knell.
Interestingly enough, rival Chico's (NYSE: CHS) also rose earlier today even though its third-quarter results were similarly unpleasant -- Ann Taylor (NYSE: ANN) didn't do much better last week. Ignore the stocks' ups and downs: The theme is that retailers aiming for older females are really falling flat, and that's exacerbated by the economic headwinds.
Talbots remains among my least favorite retail stocks. I have had a long-standing theory that its mature clientele are the shoppers who are most likely to pull back spending when times get tough, as compared to their younger counterparts. In addition, the acquisition of J. Jill was a mistake that really mucked up Talbots' balance sheet, and debt-heavy retailers aren't a red-hot idea in the current market environment.
I nominated Talbots as the World's Scariest Stock for our Halloween series this year. Foolish readers chose Starbucks (Nasdaq: SBUX) as the Scariest, but I'd say Talbots' precipitous drop from a high of $10.59 on Oct. 30 vindicates the concerns I had about the high stock price, onerous debt, flagging operations, and overall market conditions.
And I still insist, "Buyer beware." There are beaten-down retail stocks galore for companies that are not only not in dire straits, but are doing pretty well, too. Betting on Talbots' turnaround remains a speculative and risky move. There's no reason for investors to take such risks when real quality retail stocks are out there -- and on sale to boot.
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