Talbots (NYSE:TLB) may be a classic name that many people think of as a retailing stalwart, but many of us know the company has been struggling over recent history as it seeks to reignite growth after a tough year. Talbots beat analysts' estimates for its second quarter today by a penny, but whether the company is coming back into its own with its classic fare may not be so certain.
In fact, second-quarter profit at Talbots dipped 3% to $18.9 million, or $0.35 per share -- it faced a tough comparison there because last year's second-quarter earnings reflected a tax benefit. If you disregard last year's tax benefit, Talbots' earnings increased 18%. Second-quarter sales at Talbots increased 12% to $449.6 million, with same-store sales up 5.5%. Talbots gave a forecast for the full year that just matched analysts' estimates.
Take a glance at the same quarter last year. For example, same-store sales last year this time edged up a mere 0.3%, giving an easy comparison in same-store sales this time around. Although it said that same-store sales have been up every month in the first half of its fiscal year, one has to consider the fact that it's been up against those easy comparisons because of last year's sluggishness. For example, in 2004, same-store sales in August and July were down 4.6% and 8.8%, respectively.
From a fashion perspective, Talbots has been facing a lot of very tough competition in its bid for an older female demographic for quite some time. It squares off against powerhouse Chico's (NYSE:CHS), as well as Ann Taylor (NYSE:ANN), J. Jill (NASDAQ:JILL), and Urban Outfitters' (NASDAQ:URBN) Anthropologie unit, to name just a few.
Sure, Talbots trades at 15 times forward earnings, and that may sound "cheap" compared with other retailers such as Chico's or Urban Outfitters. Personally, though, if I were to go for a retailing stock, I'd probably spring for one that has been showing more growth momentum.
Take a look at Talbots over the last several months in these Foolish articles:
- Did Talbots have a classic dilemma several months ago?
- Talbots shows its tenacious streak.
- Troubles at Talbots?
- Revisit Talbots' second-quarter results last year.
Alyce Lomax does not own shares of any of the companies mentioned.
