Talbots Reports Preliminary Unaudited 2007 Fourth Quarter and Full Year Results

Business Wire, March 12, 2008

Provides 2008 Outlook and Roadmap for Profitability

HINGHAM, Mass -- The Talbots, Inc. (NYSE:TLB) today announced a preliminary unaudited net loss of $171 million or ($3.23) per share on a GAAP basis for the fourth quarter ended February 2, 2008. This result compares to a breakeven net income per share for the fourteen week period ended February 3, 2007, which included acquisition related and financing costs of approximately $0.15 per share.

Company Highlights Include:

* Fourth quarter 2007 non-GAAP operating results better than previously announced expectations

* Significant progress in executing 2007 initiatives, positions Company for success in 2008

* Focus on delivering more compelling merchandise assortments for both brands, improved inventory management and streamlined operations

* Plans to achieve profitability in 2008 and deliver long term shareholder value

The Company announced that it has not yet completed impairment testing of its J. Jill brand intangible assets acquired in May 2006. However, at this time the Company has recorded a preliminary non-cash impairment charge to fourth quarter earnings of approximately $144 million after tax or approximately $2.71 per share. This preliminary charge is greater than the initial estimate provided on February 6, 2008, due to more conservative growth and earnings projections for the J. Jill brand, combined with a larger discount rate assigned to forward projections. The Company anticipates that impairment testing will be completed in the coming weeks.

The Company's operating results were better than its previously announced expectations on a non-GAAP basis. Specifically, on a non-GAAP basis, the preliminary fourth quarter loss was $12 million or ($0.22) per share, excluding:

* Approximately $2.71 per share related to the impairment of the J. Jill intangible assets,

* $0.07 per share related to the previously announced closing of its Talbots Kids and Mens businesses,

* $0.03 per share related to the impairment of certain underperforming Talbots and J. Jill stores,

* $0.09 per share of acquisition related and financing costs, and

* $0.11 per share of expense related to employee compensation and professional consulting fees.

(See attached table for reconciliation of GAAP and non-GAAP and comparison to prior year)

Total consolidated Company sales for the thirteen weeks ended February 2, 2008 were $587 million, versus reported sales of $638 million for the fourteen weeks ended February 3, 2007. By brand, retail store sales were $388 million for Talbots, compared to $433 million for the fourteen week period a year ago, and $86 million for J. Jill, compared to $91 million a year ago. Consolidated direct marketing sales for the recent period, including catalog and Internet, were $113 million, compared to $114 million a year ago.

Consolidated comparable store sales declined 6.0% for the latest thirteen-week period. Comparable store sales for the Talbots and J. Jill brands declined 6.0% and 6.3%, respectively, driven by an especially weak November/December. Consolidated comparable store sales in January were positive low single digits.

Operating Results for the Fifty-Two Week Period

For the full fiscal year, total preliminary unaudited consolidated Company net loss was $189 million or ($3.56) per share on a GAAP basis. This result compares to $0.59 per share for the fifty-three week period ended February 3, 2007, which included acquisition related and financing costs of approximately $0.46 per share.

On a non-GAAP basis, the preliminary unaudited full fiscal year net loss was $7 million or ($0.13) per share, excluding:

* Approximately $2.71 per share related to the impairment of the J. Jill intangible assets,

* $0.07 per share related to the previously announced closing of its Talbots Kids and Mens businesses,

* $0.06 per share related to the impairment of certain underperforming Talbots and J. Jill stores,

* $0.41 per share of acquisition related and financing costs, and

* $0.18 per share of expense related to employee compensation and professional consulting fees.

(See attached table for reconciliation of GAAP and non-GAAP and comparison to prior year)

Total Company year-to-date sales for the fifty-two weeks ended February 2, 2008 were $2,289 million, compared to $2,231 million for the fifty-three weeks ended February 3, 2007. By brand, retail store sales were $1,534 million for Talbots, compared to $1,604 million a year ago, and $327 million for J. Jill, compared to $242 million a year ago. Consolidated direct marketing sales for the recent fifty-two week period, including catalog and Internet, were $428 million, compared to $385 million in 2006.

Consolidated comparable store sales declined 5.5% for the recent fifty-two week period ended February 2, 2008. By brand, comparable store sales for Talbots decreased 5.7% and for J. Jill were down 4.6%.

Talbots 2007 Key Initiatives Included:

* Filled critical senior executive positions to build on the strength of the management team.

* Conducted comprehensive strategic review of entire business to develop a long range growth strategy, completed in March 2008.