I've complained in the past about Talbots'
The company said it has entered agreements with three banks to convert uncommitted working capital lines of credit into committed lines, for a total of $150 million in available credit. It's also negotiating with a fourth bank to convert the remaining $15 million credit facility to a committed line as well.
On a related note, investors flipped last spring, when HSBC and Bank of America
Talbots already has a heck of a lot of debt piled up, and it hasn't posted a profit in the last 12 months; if anybody's getting bullish about its ability to secure more credit, that just flummoxes me. Granted, when a stock is trading as low as Talbots is -- now around $2 a share -- big percentage pops are pretty easy to achieve, and such low prices sometimes encourage a lottery-ticket mentality among investors.
Still, it's no secret that the holiday shopping season stunk for most retailers. Analysts expect a 1% drop in December retail comps overall, and the extreme frenzy of markdowns that marked the holiday season will hit retailers' margins right where it hurts. Borders
Talbots' long-term debt-to-equity ratio stands at 89.4%. Its quick ratio is 0.4. (Read more about the debt-to-equity ratio and the quick ratio.) Access to additional credit may help Talbots' near-term survival, but I'm sorry, I just can't see how long-term investors could possibly believe the idea of piling on more debt would be a good thing for this company.
There are far healthier stocks out there in the retail universe -- my Foolish colleague Kristin Graham recently took an in-depth look at The Buckle
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