On Nov. 15, Talbots (NYSE:TLB) released third-quarter earnings for the period ended Oct. 28.

  • Same-store sales rose 2.3%, made up of a 4% increase at Talbots and a 6.6% decrease at J. Jill.
  • Net income declined by 59.7% to $8.1 million, thanks to the higher cost of sales, along with an increase in SG&A expenses.
  • There was a major drop in free cash flow -- 61.9% to $16.2 million, mainly because of a decrease in cash from operations and the 19.9% increase in capital spending.

(Figures in million, except per-share data)

Income Statement Highlights

Q3 2006

Q3 2005

Change

Sales

$568.6

$426.3

33.4%

Net Profit

$8.1

$20.0

(59.7%)

EPS

$0.15

$0.37

(59.5%)

Diluted Shares

53.7

53.9

(0.4%)



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

36.9%

38%

(1.0)

Operating Margin

3.7%

7.7%

(4.0)

Net Margin

1.4%

4.7%

(3.3)

*Expressed in percentage points

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$43.0

$11.4

278.3%

Accounts Rec.

$228.9

$214.1

6.9%

Inventory

$367.9

$266.0

38.3%



Q3 2006

Q3 2005

Change

Accounts Payable

$117.7

$50.6

132.7%

Long-Term Debt

$409.0

$100.0

309%



Learn the ways of the balance sheet.

Cash Flow Highlights

YTD 2006

YTD 2005

Change

Cash From Ops.

$82.2

$97.5

(15.7%)

Capital Expenditures

$66.0

$55.1

19.9%

Free Cash Flow

$16.2

$42.4

(61.9%)



Find out why Fools always follow the money.

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