Talbots takeover collapses; retailer’s stock plunges
For all its flirting, private equity firm Sycamore Partners didn’t want to commit in the end to Talbots Inc., breaking off talks to buy the struggling women’s retailer for $215 million.
Talbots’ stock sank 36%, sinking 92 cents to $1.64, in late morning trading in New York on Friday, even as the company reported improved profit. The retailer’s negotiations with Sycamore had been extended twice since May 5.
Ultimately, Sycamore told Talbots that it wasn’t ready for a deal. The retailer said in a statement Friday that it “remains open to pursuing a transaction” with the private equity firm.
For now, however, Talbots is in the wind and “will actively explore other strategic alternatives.” All this while the Hingham, Mass., company continues to search for a successor to Chief Executive Trudy Sullivan, who plans to retire.
Talbots operates 516 stores across North America and is in the process of scaling back its store count to boost profit.
The chain is in the midst of “an aggressive promotional and markdown strategy in a challenging retail environment,” Sullivan said earlier this year. Healthier competitors such as as Ann Taylor owner Ann Inc. and Limited Brands have walloped Talbots.
But on Friday, Talbots said its net income had improved to nearly $1.1 million, or 2 cents a share, in the first quarter ended April 28. That’s a 47.9% increase from the same quarter the previous year, when Talbots made a profit of $739,000, or 1 cent.
Revenue, however, was down 8.4% to $275.9 million. Same-store sales slipped 2.2% and were also down when factoring in online and catalog revenues.
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