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Talbots cuts 129 jobs as revamping continues

Retailer expects to save $14m annually in move

Email|Print|Single Page| Text size + By Angel L. Jennings
Globe Correspondent / June 6, 2008

Talbots Inc., the struggling Hingham retailer of women's apparel, said yesterday it will eliminate 129 jobs, or 9 percent of its corporate staff, including the position of chief operating officer.

Talbots said it expects the cuts to result in annual savings of about $14 million, as part of a restructuring plan the company disclosed in April to cut costs by a minimum of $100 million by the end of next year.

Talbots reviewed 1,455 positions; 104 people lost their jobs, and 25 open positions will not be filled, a Talbots spokeswoman said. Operating chief Philip Kowalczyk will leave his post in early July. His duties will be taken over by other executives, the company said in a regulatory filing.

"While the decision to reduce our corporate head count was clearly a difficult one, it was an important and necessary step toward strengthening our organization and positioning the business for long-term success," Trudy F. Sullivan, Talbots president and chief executive, said in a statement.

Talbots, which specializes in women's apparel, shoes, and accessories, has struggled as its core customers of women over 35 have opted for casual wear instead of the retailer's classic style. Last year, the company's stock plummeted 50 percent.

Sullivan, who took the top position in August, has taken steps to revive the brand. In January, Talbots exited the children's and men's apparel businesses, effectively shuttering 78 stores across the country, and slashed 5 percent of its workforce as part of a massive overhaul. In February, the company revealed plans to close another 22 stores. And in April, the company unveiled a turnaround plan, which included cutting costs and refocusing on women's clothing.

Later that month, the company had a setback when a pair of lenders notified Talbots they would no longer provide credit totaling $265 million even as the company negotiated an extension of a smaller $18 million line of credit with a third lender. At the time, Sullivan said the company would continue with its strategic plan.

Betty Chen, a Wedbush Morgan Securities analyst, said Sullivan "has laid out the right strategy for the company by cutting out some of the fat and bringing some newness to the product. Now, it's about executing that plan. This latest round of cuts is just accelerating the pace of change."

Talbots' stock rose, 64 cents, or 8.2 percent, to $8.45 in New York Stock Exchange trading.

Angel L. Jennings can be reached at ajennings@globe.com.

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