Slow Holiday Sales Steal Talbots’ Expected Profit

Talbots Inc. warned it will have a steep fiscal fourth-quarter loss instead of an expected profit because it needs to mark down its women’s apparel after poor holiday and post-holiday sales.

The Hingham, Mass.-based retailer said in its second profit warning of the quarter that it sees a loss of 25 cents to 35 cents a share. It was expected to have a profit of 14 cents a share, based on 18 analysts surveyed by IBES International Inc.

Talbots has failed to win back middle-aged customers antagonized by a scrapped plan to appeal to younger women. In addition, shoppers shunned some apparel companies during the holidays in favor of electronics, jewelry and basic goods. The combination sent same-store sales down 10.9 percent for the five weeks ended Jan. 3. Analysts had expected sales to be unchanged.

“The stock’s going down. They have alienated their core customer, and I don’t believe it will turn around in one or two seasons,” said analyst Thomas Filandro of Gerard Klauer Mattison & Co. He rates the stock a “hold.”

In trading after the New York Stock Exchange closed, the shares fell 3/16 to 17-1/4. The warning was announced after trading stopped. Talbots’ shares closed the week at 16-9/16.

Talbots said shoppers didn’t come to its semiannual holiday sale, which began the day after Christmas. Total sales for the five weeks fell 4 percent to $148.8 million from $155.2 million.

The poor showing means Talbots earnings will be hurt by steep markdowns on its clothes, shoes and accessories as it clears the shelves for spring apparel.

In November, Talbots warned fourth-quarter earnings will be “well below” last year’s because of poor sales. In the 1996 quarter, Talbots had net income of $16.5 million, or 50 cents a share.

Still, the company said it expects to be profitable for the full year. Filandro said he lowered his estimate for the year to 17 cents a share from 60 cents.

Talbots operates 599 stores in the U.S., U.K. and Canada. It circulates about 52 million catalogs worldwide.

Some of the stocks that moved substantially or traded heavily Friday:

NYSE

Miller Industries, down 1-1/8 at 10-1/2.

The Atlanta-based provider of vehicle towing and recovery equipment said it received a letter from the Justice Department stating that it is conducting a civil investigation of competition in the industry.

Alaska Air, up 3/4 at 40-1/8.

Morgan Stanley Dean Witter upgraded Alaska Air stock.

MedPartners, down 1-1/4 at 8-3/4.

Vector Securities Inc. downgraded MedPartners stock two days after the physician practice-management company called off its proposed $6.25 billion merger with PhyCor Inc.

NASDAQ

Adaptec, down 14-3/8 at 21-9/16.

Adaptec said late Thursday that it expected third-quarter earnings to fall below Wall Street analysts’ expectations. Based in Milpitas, Calif., Adaptec provides bandwidth management technologies.

Nanophase Technologies, down 5-1/2 at 6-1/8.

The Burr Ridge, Ill.-based company expects to report fourth-quarter earnings that fall below Wall Street analysts’ expectations.

LCC International, down 5-3/16 at 8-13/16.

The McLean, Va.-based company said late Thursday that Piyush Sodha resigned from his posts as president, chief executive and board member. Friday morning, BT Alex. Brown downgraded LCC stock.

Boston Communications, down 3-9/16 at 6-3/4.

The Woburn, Mass.-based provider of telecommunications services to wireless telephone carriers said late Thursday that its fourth-quarter results would fall below Wall Street analysts’ estimates.