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2011 Proves There's Little Hope for Talbots

Alyce Lomax
December 20, 2011

Some investors have stubbornly believed for years that there's some value left in Talbots (NYSE: TLB  ) , but the developments in 2011 have proven more than ever that this retailer's a lost cause.

Earlier this year, a majority of Talbots' shareholders rejected CEO Trudy Sullivan's outrageous pay package at the long-struggling retailer. Recently, word of Sullivan's coming retirement may have come as a relief to investors, but no successor has been named yet, and Sullivan will receive a $5-million golden parachute this company can ill afford, despite her failure to turn the retailer around.

Major shareholder Sycamore Partners apparently believes there's hope left for Talbots' future, given its recent offer to buy this perennial struggler for $3 per share. Talbots' board believes that's a lowball offer and has rejected Sycamore's offer.

Are they kidding? Sycamore previously said it might offer a higher price if it was allowed to look at Talbots' information more closely, but I have to wonder if, should the folks at Sycamore happen to catch a fuller glimpse of Talbots' financial picture, they might instead be tempted to offer far less. (Talbots' board rebuffed this overture.) The market had valued Talbots at $1.46 per share at one point, after all. The market's not always that rational, but there's no doubt that Talbots has serious operational problems.

Let's compare Talbots' financials in the last 12 months to the metrics of several close retail rivals.

Revenue Gain (Loss) Percentage
Earnings (Loss) Per Share
Gross Profit Margin
Total Debt-to-Capital Ratio