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Talbots Swings to Loss, Amends Debt Covenant

Talbots said Tuesday it swung to a quarterly loss, hurt by one-time expenses and lower sales at its namesake apparel chain.

The retailer, which owns the Talbots and J. Jill brand, also said it expects to report a loss for the year. Separately, it said its lenders have changed the requirements of its financial convenants and it continues to be in compliance with these agreements.

In the latest period, Talbots posted a net loss of $9.4 million, or 18 cents per share, compared with a net profit of $8.1 million, or 15 cents per share, in the year-earlier period.

The quarter's results included 8 cents per share in acquisition-related and financing costs and 6 cents per share in expenses related to executive compensation and professional consulting fees.

The company had forecast a net loss of 20 cents to 25 cents per share.

Sales in the quarter, which ended Nov. 3, were $556 million, down from $568.6 million a year ago, as an increase in J. Jill sales was offset by a decline at the much bigger Talbots brand.

Sales at stores open at least a year fell 7.9 percent, with an 8.2 percent decline at Talbots and a 6.5 decline at J. Jill.

The company, which has been struggling for some time to lure back its target mature women shoppers, affirmed its outlook for the fourth quarter, saying it still expects a loss of 5 cents to 10 cents per share, including items.

For the fiscal year, Talbots expects its loss will be in the range of 38 cents to 43 cents a share, including 37 cents in acquisition-related and financing costs and 14 cents of expenses related to executive compensation and professional consulting fees.

The retailer said for next year its banks are requiring a leverage ratio of 4.0 and a charge ratio of 1.25, versus a leverage ratio of 2.5 and a charge ratio of 1.6 for the current fiscal year.