Talbots Inc. on Wednesday revised its forecast for the fall season, citing weaker than expected sales in its namesake brand, and said a gloomy economy is weighing on consumers. Talbots said in addition to its lackluster sales, it's being hit by an increasingly conservative "consumer spending mindset," dismal industry outlook for the holidays and an uncertain economic environment.Earlier this month The Gap (GPS), Target (TGT), J.C. Penny (JCP), Wal-Mart (WMT), Nordstrom (JWN), and the Children's Place (PLCE) all lowered earnings estimates blaming "warm weather".
The company also said it will be out of compliance with its financial covenants.
For the third quarter, Talbots (TLB) expects a loss in the range of 20 cents to 25 cents a share, including 7 cents a share of one-time expense related to executive compensation and professional consulting fees. For the fourth quarter, Talbots currently anticipates a loss per share in the range of 5 cents to 10 cents, including 9 cents a share of one-time expenses.
See Cargo Decline Portends Consumer Weakness and Heat Cools Retail Sales for more on the lame weather excuse.
The key sentence in all of this is easy to piece together: "The consumer spending mindset is increasingly conservative." One by one, and store by store, consumers are throwing in the towel. This does not bode well for retail store expansion, holiday sales, or hiring plans. It also does not bode well for an economy 100% dependent on an ever increasing expansion of credit.
Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/
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