Talbots, When Low Growth Is Good Enough (TLB)

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Talbots (NYSE: TLB) is seeing shares surge today after the apparel maker and retailer unveiled its strategic plan for long-term growth and for productivity improvement.

For starters, the company reaffirmed its guidance and it sees Fiscal-09 between $0.47 and $0.52.  We have consensus as $0.37 EPS from First Call. Talbots is planning for top-line growth of roughly 3%, based on a slightly negative comparable sales with the Talbots brand being 11% and the J. Jill brand rising by +1%.

As far as productivity, Talbots is becoming a design-led organization that will focus on compelling merchandise that reflect each of its brand’s unique identity. It will streamline operations, control costs and inventories, use innovative marketing, and implement more efficient processes enterprise-wide.

The company has identified its key growth platforms to build its business on going forward that will drive long-term growth, profitability, and enhanced shareholder value.

Shares are up over 10% today at $11.90 in mid-day trading.  Three or four months ago, this news would have probably sent shares south because of low top-line growth.  With a $6.48 to $26.10 trading range over the last year, it looks like the earnings beat will be plenty.  Now it just has to execute this plan.

Jon C. Ogg
April 1, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.