The Talbots Inc. will eliminate 370 corporate jobs as part of a new expense reduction program that is in addition to a restructuring plan announced last year. The multichannel merchant also has secured an interest-only loan to help improve cash flow.
“We continue to make progress with the implementation of the strategy we outlined in April 2008 to rejuvenate the Talbots brand and streamline our operations,” said Trudy F. Sullivan, president and CEO at Talbots, in a statement. “However, the ongoing impact of the global economic crisis on our business demands that we take further immediate and decisive action to drive greater efficiencies throughout our organization.”
As previously announced, Talbots is in the process of trying to sell its J. Jill brand.
Talbots is the latest multichannel merchant to feel the pinch of the ongoing economic crisis. The company reported that sales for the 13 weeks ended January 31 totaled $328 million compared to last year’s sales of $428 million. Comparable store sales declined 24.6% during the same period. Direct marketing sales for the 13-week period were $49 million, including catalog and Internet, compared to $67 million last year.
To better position the company for the long term and economic recovery, Talbots is eliminating approximately 370 corporate level positions across all locations, about 17% of the company’s corporate headcount. It also will continue to rationalize its hourly work force in its stores and call center.
Other steps being taken by the company include suspending matching contributions to the 401(k) plan and an increase in employee health care contributions.
Talbots also is reducing its planned capital expenditures for fiscal 2009 to approximately $23 million, which is almost 50% lower than 2008’s anticipated $43 million in capital expenditures.
The planned capital expenditures for 2009 will support the rollout of Talbots’ new upscale outlet stores, a refreshing of its e-commerce platform and store renovations.
Talbots also has identified approximately 20 underperforming stores that it plans to close in fiscal 2009.
These moves are in addition to a new unsecured term loan facility for $200 million being provided by Aeon Co. Ltd., which is Talbots’ majority shareholder.