The specter of a baby boomer bust haunted the second-quarter results Talbots
Talbots did manage to swing to second-quarter net income of $941,000, or $0.01 per share, compared to a loss of $24.5 million, or $0.45 per share, this time last year. In another positive element, Talbots' debt load fell to $37.4 million, from its previously deathly $497.1 million level this time last year.
However, Talbots' sales weren't up to snuff. Total revenue fell 1.3% to $300.7 million, and same-store sales fell 1.4%. The revenue figure missed analysts' expectations for $315 million in sales.
Talbots offered a grim outlook for the rest of the year, predicting revenue growth in the low single digits, as opposed to its previous expectation for 3% to 5% sales growth. (To put this in perspective, Talbots hasn't reported annual revenue growth since the fiscal year ended January 2006.)
Baby boomers are facing major financial obstacles and reduced discretionary funds these days, and companies that cater to them could experience their share of problems, too. Folks who are struggling to afford retirement aren't likely to spend tons of money on luxuries. Fashionable apparel purchases could go by the wayside, now that older shoppers feel less flush.
Talbots faces a particular challenge here, since it has long been struggling to stage a turnaround. Still, investors should feel similarly skeptical of other retailers that cater to older female shoppers, such as Chico's
Investors would be better off considering stocks such as Wal-Mart
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Alyce Lomax does not own shares of any of the companies mentioned. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool has a disclosure policy.