Retailer Planning to Rightsize Portfolio from 587 Stores Closer to 400, Grow Its Upscale Outlet Line
Talbots is looking to slim down. The leading specialty retailer and direct marketer of women's classic clothing, shoes and accessories, plans to reduce its store count from the 587 locations it currently operates to around 400 -- and do so relatively quickly.
Last fall, Talbots outlined a plan to close 75 to 100 stores over the next three years. This week, the company said it was stepping up that plan.
"We are now planning an accelerated store closing time frame that would allow us to more quickly reduce our store base and square footage while improving overall store productivity," Trudy Sullivan, CEO and president, said in the company's fourth quarter earnings conference call.
"At this time, we anticipate closing 90 to 100 stores and consolidating and/or downsizing 15 to 20 stores over the next two years. By the end of fiscal 2011, we anticipate that we will complete the majority of these actions."
In the call, Sullivan said "as we sit here today looking at it, we think a store fleet of around 400 stores makes sense."
"With over 300 lease events coming due over the next three years, the majority of the closings will come from lease expirations and the exercise of lease termination rights," Sullivan said.
"We believe the acceleration of store closings is an appropriate strategy based on our customer, the market and how we want our operations to be structured," she said. "The store closings will provide us with a more appropriate cost structure and allow us to make better use of our inventory dollars."
"In conjunction with the store closings, we plan to implement a targeted marketing program to support the transfer of customer spend to other stores in the same markets or to our direct business," Sullivan added. "Based on the expected timing of the closures this year, we anticipate that we will start to see the benefits of these actions next year and beyond."
Sullivan said the majority of the closures will take place in 2011, more back-half weighted than front-half weighted.
In addition to its store closing strategy, Talbots plans to renovate an additional 70 stores versus its original plan to upgrade 50 stores.
Michael Scarpa, COO, CFO, principal accounting officer and treasurer, pointed out that the closure plan did not mean the end of new-store openings. He said Talbots' is still plans to open 20 upscale outlets this year.
"We continue to be pleased with the performance of our Upscale Outlet business with sales per square foot in excess of $400 and comps trending up high-single digits," Scarpa said.
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