Talbots (TLB) Getting Crushed After Failed Takeover

Wyatt Investment Research

Women’s retailer Talbots (TLB) was counting on a takeover bid from private-equity firm Sycamore Partners. Now that the deal has fallen through, Talbots’ stock is getting crushed.

Shares of the micro-cap stock were down 36% in mid-morning trading, pushing Talbots to the brink of a 52-week low. Talbots stock started the day at $2.56 per share; it’s now going for just $1.65 a share.

With market cap of $117 million (and falling), Talbots is certainly small-time when it comes to publicly traded U.S. retailers. But a takeover by Sycamore Partners, with which Talbots had been in exclusive negotiations this month, would have bumped the company’s value to about $215 million. Ultimately, however, Sycamore elected to pass on the deal.

That’s bad news for a company that could desperately use a takeover. Talbots has been shuttering stores, reducing its inventory and cutting jobs in recent months. Despite those cost-cutting measures, the retailer lost $111 million in its last fiscal year.

On the bright side, the company reported today that its first-quarter earnings rose 48% from a year ago, with a profit of $1.1 million, or two cents per share. That’s up from $739,000, or a penny per share, a year ago.

However, sales dropped 8.4% and same-store sales decreased 3.8%. For the year, Talbots is projecting a 5.4% decline in same-store sales.

Year to date, Talbots stock is down 38%. 



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