Talbots Reports Record Second Quarter Earnings Per Share of $0.35, above First Call Consensus Estimate

Business Wire, August 17, 2005

HINGHAM, Mass. -- The Talbots, Inc. (NYSE: TLB) today announced results for the second quarter ended July 30, 2005. Net income in the second quarter was $18.9 million compared to $19.4 million last year. Last year's net income included a $3.4 million tax benefit or $0.06 per share. Excluding the tax benefit, last year's net income was $16.0 million. Earnings per share were $0.35 this year versus $0.34 last year, a 3% increase. Excluding the tax benefit, last year's earnings per share were $0.28 compared to $0.35 this year, reflecting a 25% increase.

Total Company net sales increased 12% to $449.6 million from $401.5 million last year. Retail store sales were $388.8 million, an 11% increase over the $349.0 million reported in the second quarter last year. Included in retail sales was an increase of 6.7% in comparable store sales. Direct marketing sales, which include catalog and Internet, increased 16% to $60.8 million versus $52.5 million for the fiscal quarter last year.

For the six-month period, net income was $53.4 million versus $52.8 million last year. Last year's net income included a $3.4 million tax benefit or $0.06 per share. Excluding the tax benefit, last year's net income was $49.4 million. Earnings per share were $0.98 this year versus $0.92 last year, a 7% increase. Excluding the tax benefit, last year's earnings per share were $0.86 compared to the $0.98 this year, reflecting a 14% increase.

Total Company net sales increased 10% to $896.1 million from $813.7 million in the first half last year. Retail store sales were $766.9 million, 10% above the $697.6 million in the same period last year. Included in retail store sales was an increase of 5.5% in comparable store sales. Direct marketing sales increased 11% to $129.2 million, compared to $116.1 million reported in the six-month period last year.

Arnold B. Zetcher, Chairman, President and Chief Executive Officer, commented, "We are delighted to have achieved record second quarter earnings per diluted share of $0.35, above the current First Call consensus estimate. This reflects a 25% increase over last year's earnings per share of $0.28, excluding the $0.06 tax benefit. Our results were driven by consistently healthy sales growth in all concepts, U.S. regions and across all channels, including stores, catalog and the Internet."

Mr. Zetcher continued, "Looking at the entire first half of the year, we experienced six consecutive months of positive comparable store sales and ended the spring season with a solid 5.5% comp store increase. In addition, we achieved earnings per share of $0.98, which reflects a 14% increase over last year's $0.86 excluding the $0.06 tax benefit, setting a new record for our Company. Our customer's positive response to our spring and summer merchandise assortments contributed to a steady improvement in our business throughout the entire season resulting in solid top and bottom line growth."

"Regarding our store expansion plan, we opened 11 new stores during the quarter, and closed three, bringing the total number of stores to 1,062 at the end of the period. We remain on track to open a net of 25 stores in the second half and expect to operate approximately 1,087 stores by the end of fiscal 2005."

"Looking ahead, we are pleased with our fall merchandise assortments and will look to further the momentum in our business with a comprehensive marketing program beginning in late August. Our plans include national print and television advertising, as well as a number of more immediate traffic generating events that will be offered throughout the remainder of the fall/holiday season."

"In closing, we are optimistic as we enter the fall selling season. In terms of our outlook, we are currently planning for second half growth in earnings per share of approximately 16% over the prior year period, including last year's third quarter $0.08 tax benefit. If you exclude the $0.08 tax benefit recognized last year in the third quarter, this would reflect a 29% increase in earnings per share over the prior year period. Achieving our plan would yield full year 2005 earnings per share in line with the current First Call consensus estimate of approximately $1.87," concluded Mr. Zetcher.

As previously announced, Talbots will host a conference call today, August 17, 2005 at 10:00 a.m. eastern time to discuss second quarter results. To listen to the live Webcast please log on to http://www.talbots.com/about/investor.asp. The call will be archived on its web site www.talbots.com for a period of twelve months. In addition, an audio replay of the call will be available shortly after its conclusion and archived until August 19, 2005. This call may be accessed by dialing (877) 519-4471, pass code 6364199.

Talbots is a leading national specialty retailer and cataloger of women's, children's and men's classic apparel, shoes and accessories. The Company operates 1,071 stores - 528 Talbots Misses stores, including 20 Talbots Misses stores in Canada and four Talbots Misses stores in the United Kingdom; 290 Talbots Petites stores, including four Talbots Petites stores in Canada; 41 Talbots Accessories & Shoes stores; 71 Talbots Kids stores; 104 Talbots Woman stores, including three Talbots Woman stores in Canada; 12 Talbots Mens stores; one Talbots Collection store; and 24 Talbots Outlet stores. Its catalog operation currently expects to circulate approximately 48 million catalogs worldwide in fiscal 2005. Talbots on-line shopping site is located at www.talbots.com.