Talbots Backs 2008 Outlook; Sees Sufficient Funding
Hingham, Mass. The Talbots Inc. affirmed its 2008 outlook on Friday and said meeting that goal would give it sufficient funding to continue turning around its business.
Talbots said it revised its payment terms with major vendors, giving it enhanced financial flexibility and increased operating cash flow.
The company also said it has working capital lines of credit totaling $165 million and believes that these lines will be enough to fund its working capital requirements for the current year.
Talbots said it expects to report a loss of 7 cents to 17 cents per share this year, hurt by a loss from discontinued operations of 59 to 64 cents per share. But on a continuing basis, the company stood by its full-year earnings forecast for a profit of 47 cents to 52 cents per share with top-line growth of about 3% on "slightly negative" same-store sales.
Talbots, which is majority owned by Japan's Aeon Co. Ltd., reiterated its outlook the day after it was reported that two major lenders would not continue to provide credit— totaling $265 million—to the apparel retailer.
In other news, a Maryland court order, made public on Thursday, has issued orders to Talbots to pay $1.1 million in back state income taxes. The Talbots court order is part of a Maryland campaign to crack down on companies that incorporate in Delaware to avoid paying Maryland income tax.
The Maryland Tax Court ruled that Talbots owed the money for income taxes from 1993 to 2003. Talbots set up a subsidiary in Delaware called Classics Chicago to reduce its corporate income taxes.
"The vast majority of Maryland businesses are playing by the rules, and we will not allow a few large corporations to gain an unfair competitive advantage by flouting our tax laws," Peter Franchot, Maryland comptroller, said Thursday. Talbots has not yet commented publicly on the ruling.