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Apr-17-2008Talbots sticking with plan(topic overview)
CONTENTS:
- The stock dropped $3.68, or 29 percent, to $9.17 in late morning trading. (More...)
- Sullivan suggested the market overreacted yesterday, however, sending Talbots shares down $3.69, or 28.72 percent, to $9.16. (More...)
- The news comes as many retailers are responding to the weak economy by closing stores, delaying expansion plans and paring costs. (More...)
- "With two major banks walking away, it won't be easy and financing will not be cheap," Meyer wrote in a client note. (More...)
- Our network comprises business and financial news web sites read by millions of business decision-makers around the world. (More...)
- The retailer also has $165 million available to borrow for working capital. (More...)
- "The letters of credit and vendor financing are the core of retail liquidity,'' said Jeffrey Bloomberg, a principal at financial advisory firm Gordon Brothers Group LLC in Boston. (More...)
SOURCES
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The stock dropped $3.68, or 29 percent, to $9.17 in late morning trading. According to a filing with the Securities and Exchange Commission, Talbots said HSBC will phase out its $135 million line of credit over several months, while Bank of America canceled its $130 million credit line. Oppenheimer & Co. analyst Roxanne Meyer said this news means that Talbots will have a tough time finding a new form of financing. [1] Talbots plunged $3.65, or 28 percent, to $9.20 at 12:54 p.m. in New York Stock Exchange composite trading, the biggest drop since it went public 14 years ago. In a regulatory filing released Tuesday, the apparel company said it had been informed last week by two banks - HSBC and Bank of America - that the lenders would discontinue its credit lines to the retailer. Bank of America informed it on April 7 said it would not replace its credit agreement that expired on February 23, and canceled new drawings made under the previous credit facility.[2] April 16 (Bloomberg) -- Talbots Inc., the women's clothing chain that lost half its market value in 2007, fell the most in more than 14 years in New York trading after two banks canceled $265 million in letters of credit. Talbots plunged $3.69, or 29 percent, to $9.16 at 4:02 p.m. in New York Stock Exchange composite trading, the biggest drop since its initial public offering in November 1993, after saying yesterday that HSBC Holdings Plc and Bank of America Corp. ended the agreements.[3]
Talbots Inc., the women's clothing chain with stores in Freehold Township, Shrewsbury and Wall that lost half its market value last year, fell the most in more than 14 years in New York trading after HSBC Holdings Plc and Bank of America Corp. said they will cancel letters of credit to the retailer.[4]
Light, sweet crude for May delivery responded by rising as high as $115.07 on the New York Mercantile Exchange, and later settled up $1.14 at a record $114.93 a barrel. Shares of Talbots Inc. plunged after two banks decided to cut off their flow of credit to the women's apparel retailer, making it tougher to find cash as the chain tries to rebound from recent financial losses and store closures.[5] Shares of women's fashion retailer The Talbots, Inc. (NYSE:TLB) have declined nearly 30% on news before the opening that two banks will no longer provide a total of $265 million in credit. In a filing with the U.S. Securities and Exchange Facilities the Hingham, Mass. -based company said that it will try to secure credit lines with other banks and will resort to using its cash on hand if a new source of financing is not found.[6] Two banks to cut $265m in credit for struggling Talbots Boston Globe A pair of lenders has notified Talbots Inc. they will no longer provide credit totaling $265 million to the financially troubled women's clothing retailer, even as Talbots negotiated an extension of a smaller $18 million line of credit with a third lender, according to a company filing with the Securities and Exchange Commission yesterday.[7] After markets closed Tuesday, the chain of more than 1,400 stores disclosed in a Securities Exchange Commission filing that Hong Kong-based HSBC will phase out a $135 million line of credit that Talbots uses to finance purchases of foreign-made clothing and apparel.[8] After markets closed Tuesday, the chain of more than 1,400 stores disclosed in a Securities Exchange Commission filing that Hong Kong-based HSBC will phase out a $135 million line of credit. Another line of credit totaling $130 million from Bank of America has expired and won't be renewed.[9]
"We believe the perception is likely to be far worse than reality," Slater wrote. In a filing with the Securities and Exchange Commission earlier this week, Talbots said it was notified on April 9 that the Hongkong and Shanghai Banking Corp. would gradually be cutting off a $135 million line of credit used to import merchandise.[10]
HSBC notified Talbots that it will reduce credit in steps before canceling it Aug. 8. Another line of credit totaling $130 million from Charlotte, N.C. -based Bank of America has expired, and won't be renewed. The same regulatory filing said another lender, Japan's Mizuho Corporate Bank Ltd., extended an earlier agreement, allowing Talbots to borrow up to $18 million over two years. Talbots also said it has renegotiated payment terms with vendors that supply about three-quarters of its foreign-made merchandise, and will seek improved terms with other vendors. The renegotiated terms, which give Talbots more time to make payments, are expected to add $40 million to operating cash flow this year, Talbots said in Wednesday's news release.[8] Talbots said the Mizuho Corporate Bank had extended a credit line on April 11 providing for up to $18 million in borrowing over the coming year. The filing said Talbots had renegotiated payment terms with unspecified vendors from which it purchased the bulk of its merchandise and was seeking similar agreements with other vendors. It also said the Hingham retailer was actively pursuing other sources of lending.[7]
"We would expect a hit to cash and earnings." Talbots' statement said its loss of letters of credit has been offset by the company's plans to reduce inventory and by about $40 million in additional operating cash flow from new agreements with vendors that supply about three-quarters of its merchandise. Under renegotiated deals, Talbots said, it extended its payment period to those vendors from 22 days to 45 days. The retailer, which lost $171 million on a sales decline of 8 percent in the first quarter, also said it's negotiating with several financial institutions to provide new credit totaling about $50 million. That would cover its purchases of inventory from remaining smaller vendors. Talbots said it still has available working capital lines totaling $165 million, enough to fund its capital needs for the balance of the year if it follows its operating plan. Combined with its projected $40 million in additional cash flow, the company expects to have overall operating cash flow of about $200 million for 2008.[11] Shares of Talbots Inc. tumbled almost 30 percent yesterday as nervous investors reacted to the disclosure that two lenders had canceled $265 million in letters of credit to the women's clothing retailer. Officials at the Hingham company released a statement yesterday afternoon that says they are pursuing a turnaround plan unveiled early this month and have sufficient operating cash and working capital to meet their funding needs for the rest of the year. Under the plan, the company will substantially reduce its credit needs this year, while closing men's and children's stores, paring inventory, and refocusing on its core business of women's clothing.[11] Shares of Talbots Inc., the womens clothing department store, plunged more than 30 percent on Wednesday, a day after the company announced it had lost $265 million in credit. Get stories by e-mail on this topic.[2]
CHICAGO, April 16 (Reuters) - Talbots Inc (TLB.N: Quote, Profile, Research ) shares plunged as much as 33 percent on Wednesday after the women's apparel retailer disclosed that two major banks would no longer make letters of credit available to the company. Talbots said arrangements with its major vendors, as well as available working capital lines, should provide enough funds for its working capital needs this fiscal year.[12] CHICAGO, April 16 (Reuters) - Talbots Inc (TLB.N: Quote, Profile, Research ) said on Wednesday it expects to have sufficient funding for its 2008 capital needs due to arrangements with its major vendors, along with currently available working capital lines. The women's apparel retailer also said it expects to be in compliance with all covenants of its acquisition term loan agreement for the current fiscal year, assuming it achieves its operating plans for the year.[13]
The retailer said it will add larger-size clothing and accessories to revive sales, and plans to introduce a chain of apparel outlets. Talbots has been seeking a formula to attract the women aged 35 and older who have been its main customers, hiring a consultant last year to conduct a "strategic review'' and bringing in new leadership including CEO Sullivan, who joined the company in August from Liz Claiborne Inc. In January, Talbots said it would stop selling children's and men's clothing and cut 5 percent of its workforce. The company sells its tailored clothing in high-income communities and resort areas such as Bridgehampton, New York, and Boca Raton, Florida.[3] Talbots fell $3.22, or 25 percent, to $9.63 in early New York Stock Exchange composite trading, the biggest drop since the company's initial share offering in November 1993.[4] A $130 million letter of credit with Bank of America expired, while HSBC, which originally agreed to back $135 million, will guarantee reduced amounts until the accord ends in August. New York Stock Exchange revealed the consequences of this action - $3.85 - $9 fall of its shares Wednesday that marks the biggest drop since its initial share sale in November 1993.[14] A $130 million letter of credit with Bank of America expired, while HSBC, which originally agreed to back $135 million, will guarantee reduced amounts until the accord ends in August, Talbots said yesterday in a regulatory filing. About 78 percent of Talbots merchandise and 88 percent of goods bought by its J. Jill unit in 2006 came from international sources, the retailer said in its 2007 annual report. "The banks are pulling back, and they all get scared at the same time,'' said Appel, a managing director at Quest Turnaround Advisors LLC. "They are not going to lend to retail. This has happened before in a recession, but it is exacerbated by the credit crunch.''[3] HSBC had provided $135 million credit limit, while Bank of America had provided $130 million. "Bottom line is that Talbots is likely to see its operations hurt and/or financing more expensive; we would expect a hit to cash and earnings," Oppenheimer analyst Roxanne Meyer said in a research note. "It also raises concerns as to the ability of Talbots to access capital to finance future growth, which in part is dependent on Talbots ability to improve fundamentals," he said.[2] Lazard Capital Markets says the cancellation of lines by Bank of America Inc. and HSBC is more a "perception problem" than reality. They note that the firm had $127 million in credit lines at the end of the third quarter (which probably fell in the fourth quarter) but added that the company's planned inventory reduction makes it less dependent on these lines of credit. Bank of America cancelled a $130 million line of credit, while HSBC dumped its $135 million line of credit. ( The latter line is being reduced, in excruciatingly slow fashion, every month until it runs out in August.)[15]
Eight midsize retail chains, including the Levitz furniture stores and the Sharper Image electronics seller, have sought protection under Chapter 11 of the U.S. Bankruptcy Code over the past six months, while others have been shutting stores. The victims in Massachusetts have included Norwood furniture chain Domain Home, which filed for bankruptcy Jan. 18 after lenders pared its credit line. "You're starting to see the banks trying to limit their risk because of the credit crisis and because retail doesn't look like a good place to extend credit right now," said Crystal Lanigan Kallik, specialty retail analyst for D.A. Davidson & Co. in Lake Oswego, Ore. In its SEC filing yesterday, Talbots said it was notified on April 9 that the Hongkong and Shanghai Banking Corp. would gradually be cutting off a $135 million line of credit used to import merchandise.[7] Talbots also said in the filing that a $130 million credit line from Bank of America Corp. expired on Feb. 23, and the retailer was told on April 7 that no new credit would be provided.[10] A $130 million line of credit from Charlotte, N.C. -based Bank of America has expired, and won't be renewed. Without enough takers of buyout offers, The New York Times very likely will resort to layoffs to meet its goal of cutting 100 newsroom jobs.[5]
Shares of The Talbots Inc. dropped on Wednesday, following news that the women's retailer will need to find new financing after HSBC and Bank of America pulled their lines of credit.[1] More evidence of the banking sector's unwillingness to lend money has erupted, all over Talbots, the women's clothing chain, whose shares are down more than 30% after the retailer disclosed in a regulatory filing that two banks had canceled lines of credit. It is another sign of the way in which the credit crunch, which was the main villain in some bank earnings today, has spread as far as women-clothing retailers.[16] BOSTON (AP) - Shares of Talbots plunged today after two banks decided to cut off their flow of credit to the women's apparel retailer. That promises to make it tougher to find cash as the Hingham-based chain tries to rebound from recent financial losses and store closures.[9] Struggling retailer Talbots (TLB) now has virtually no recourse but to answer the question "cash or credit?" with an affirmative choice for the former. The women's apparel merchant, which had asked suppliers back in January to delay sending bills it couldn't pay in order to keep the company from violating covenants with its lenders, has lost the support of two of the banks that supplied it financing.[17]
Talbots also said that a previous lending facility from Bank of America expired, and that the bank had no intention of offering a replacement. The company said it would pay for merchandise it ordered from its available cash. Clearly that raised some questions about the retailer's ability to execute on its ambitious plan, unveiled two weeks ago, to revamp its product offerings. The stock jumped 11% the day the company unveiled its new merchandise, but has more than given that up in Wednesday's trading. Another big retailer, J.C. Penney (JCP), has stumbled in Wednesday's trading. Company officials, appearing at an analyst conference, said they have seen a "dramatic decline" in demand for the department store operator's merchandise. The company said it anticipated a decline in its operating income, and expected its gross margins to decline.[17] On April 1, Talbots announced a strategic plan that includes cutting costs and streamlining operations while increasing investments in certain areas. Those include adding 35 new Talbots Woman stores that are geared toward larger women, and offering a fuller assortment within its core Talbots Misses stores. In January, Talbots said it would close its 78 children's and men's stores to focus on its core middle-aged female customer. Talbots' stock lost about half its value last year, and shares dipped to as low as $6.48 in January.[8]
The stock rebounded in March, when the company announced a fiscal 2008 forecast that exceeded Wall Street expectations. Talbots recorded a fourth-quarter loss of $171 million, in part due to a charge from recent disappointing results at its J. Jill women's clothing stores, which Talbots acquired in 2006.[8] Officials at the Hingham company couldn't be reached for comment late yesterday. Talbots last month posted a $171 million first-quarter loss on a sales decline of nearly 8 percent, as it scrambled to close stores it has opened for men and children and wrote down the value of goodwill associated with its $518 million acquisition of J. Jill Group in 2006.[7] Talbots reported a $171 million loss in the fourth quarter that ended Feb. 2, 2008. Annual sales growth may be 4 percent by 2010 after an increase of 3 percent this year, the company said earlier this month. This article is copyrighted by International Business Times.[2]
The stock dropped $3.69, or 29 percent, to close at $9.16, after sinking as low as $8.57 earlier in the session. Hingham, Mass. -based Talbots issued a news release late in the Wednesday's trading session saying it has enough cash to fund its business initiatives this year, but the statement did little to ease the sell-off.[8]
D.A. Davidson analyst Crystal Kallik downgraded the stock to "Underperform" from "Neutral" and said the news lowers available credit by $265 million. "We are concerned about the company's ability to access additional capital in the current credit markets, given its weak business trend and leveraged balance sheet," Davidson wrote.[1] "With two major banks walking away, it won't be easy and financing will not be cheap," Meyer wrote in a research note. Another analyst, D.A. Davidson's Crystal Kallik, downgraded her rating of Talbots stock to "underperform" from "neutral." "We are concerned about the company's ability to access additional capital in the current credit markets, given its weak business trend and leveraged balance sheet," Davidson wrote.[8]
Sullivan suggested the market overreacted yesterday, however, sending Talbots shares down $3.69, or 28.72 percent, to $9.16. "I'd say it's a good buying opportunity," she said. In a filing with the Securities and Exchange Commission late Tuesday, Talbots indicated that both Hongkong and Shanghai Banking Corp. and Bank of America had said they no longer would extend financing to import merchandise. [11] According to a filing with the Securities and Exchange Commission, Talbots was informed last week by Charlotte-based Bank of America Corp. (NYSE:BAC) and The Hongkong and Shanghai Banking Corp. that the lenders wouldn't continue providing credit to the retailer.[18]
Talbots also said in a regulatory filing that Bank of America (BAC.N: Quote, Profile, Research ) informed it on April 7 that it would not provide a new credit agreement to replace one that had expired on Feb. 23, and it would no longer honor new drawings made under the previous credit facility.[12] "If the company is unable to secure new letter of credit agreements, the company intends to purchase inventory without utilization of letters of credit, subject to the availability of cash on hand," Talbots said in the filing.[7] Under Chapter 11 of U.S. bankruptcy law, a company seeks court protection from creditor lawsuits while working out a reorganization. Talbots said it's in talks with lenders for a $50 million letter of credit, which would be enough to satisfy the vendors that didn't agree to the new terms.[3] Losing the letters of credit, in which lenders guarantee payment for merchandise, means most suppliers in Asia won't ship goods to Talbots without up-front cash payments, said consultant Michael Appel. The retailer, which imports most its clothes, had $25.5 million in cash at the end of February, down from $35.9 million a year earlier, according to data compiled by Bloomberg.[3] Talbots (NYSE: TLB), a Massachusetts clothing retailer, plunged deeper in more than 14 years when it learned that two banks canceled $265 million in letters of credit.[14]
Talbots said the Mizuho Corporate Bank had extended a credit line on April 11 providing for up to $18 million in borrowing over the coming year.[10] Mizuho Corporate Bank Ltd. is willing to lend the retailer as much as $18 million, Talbots said Tuesday in a regulatory filing.[4]
The company had just been approved for an $18 million extension of credit provided by Mizuho Corporate Bank, the filing says.[18] The company had just been approved for an $18 million extension of credit provided by Mizuho Corporate Bank Ltd., said the SEC document.[19]
HSBC had provided $135 million credit limit; Bank of America had provided $130 million.[19] TLB filed an 8K saying Bank of America cancelled its $130 million letter of credit (LOC) to TLB and HSBC reduced its LOC to $60 million from $130 million and will phase out its LOC with TLB by August 8th.[20]
BofA had provided $130 million credit line, with HSBC providing the remainder.[18] Oppenheimer Co. analysts estimate available credit at about $78 million $60 million of the dwindling HSBC line and Mizuho Co.' s new $18 million line. They note that the retailer borrowed $143.2 million at the end of 1Q07 and $102.5 million in 1Q06.[15] Talbots also said it is in talks with banks in hopes of securing a $50 million line of credit "in the next few weeks."[8]
The filing said Talbots was told the bank would cancel the credit line entirely on Aug. 8.[10]
Bank of America had previously allowed Talbots to use letters of credit under terms of the expired agreement.[12] If it fails to secure agreements, Talbots said it "intends to purchase inventory without utilization of letters of credit, subject to the availability of cash on hand." Talbots said last month that discussions with lenders to increase its credit were taking longer than expected "given the current condition in the global credit markets."[21]
Talbots, which is majority owned by Japanese retailer Aeon Co Ltd (8267.T: Quote, Profile, Research ), said Wednesday that it recently negotiated "open account" payment terms with vendors that account for 75 percent of the company's overseas merchandise purchases and that it will also pursue new letter-of-credit agreements with other lenders.[12] About 75 percent of Talbots's overseas purchases are now covered by an agreement that gives the retailer 45 days to pay it vendors, the company said in the statement.[3]
The company has "an alternate plan in place,'' Chief Executive Officer Trudy Sullivan said today in a statement. The retailer revised most of its vendor agreements to "greatly reduce our need for letters of credit.''[3]
The news comes as many retailers are responding to the weak economy by closing stores, delaying expansion plans and paring costs. Chains selling women's clothing, such as Talbots, Chico's FAS Inc., and AnnTaylor Stores Corp., are having a particularly tough time getting customers to spend. [22] Many retailers have been struggling in a sluggish economy, and Talbots also seems to be feeling the effects of a fashion shift; instead of donning its classically styled attire, many of the middle age women who make up the company's target audience are opting to wear casual clothing more frequently, both in the office and during leisure pursuits. In a note to investors this morning, Lazard Capital Markets analyst Todd Slater wrote that he doesn't see any "liquidity crisis" at Talbots.[10]
Analysts said companies that react quickly and operate smartly can recover. "This illustrates the tough credit environment businesses are facing today," said Todd Slater, of Lazard Capital Markets in New York. "But Talbots has the liquidity and resources to get through this.[11] The turnaround may take longer than hoped. If the company executes on its plan, good things will happen." Another analyst, Roxanne Meyer of Oppenheimer & Co. in New York, warned that new financing will not be easy or cheap for Talbots. "Bottom line is that Talbots is likely to see its operations hurt and/or financing more expensive," she wrote.[11] NEW YORK (AP) -- Shares in chip maker Intel (NASDAQ:INTC) Corp. jumped Wednesday after the company's first-quarter profit beat Wall Street expectations and it delivered a strong 2008 forecast, but some analysts sounded notes of caution. NEW YORK (AP) -- Shares of Royal Caribbean Cruises Ltd. (NYSE:RCL) climbed Wednesday after the cruise operator announced its latest offering -- a ship featuring an expanse resembling New York's Central Park.[23] NEW YORK (AP) -- Shares of Seagate Technology (NYSE:STX) are down after the hard-drive maker reported quarterly revenue below Wall Street estimates, leading several analysts to cut share price targets and at least one to downgrade.[23]
Analysts surveyed by Thomson First Call expected a loss of $1.34 per share. Crude-oil futures made their first foray past $115 Wednesday, propelled to a new record by concerns about how much gasoline will be available in the peak summer months.[5] Analysts at D.A. Davidson Co. downgraded shares today, estimating the company's remaining borrowing facilities at around $125 million. It will have to pay $35 million in yearly debt interest and $28 million for the dividend.[15] AMR Corp. of Fort Worth, Texas, said the loss equaled $1.32 per share, compared with a profit of $81 million, or 30 cents per share, in the same period last year.[5] The 61-year-old Talbots posted a loss of $188.8 million last year and has struggled to win customers from Coldwater Creek Inc. and Macy's Inc., which have offered more stylish choices to middle-aged shoppers.[3] Talbots, based in Hingham, Massachusetts, bought the J. Jill brand for about $517 million two years ago to add more casual clothing.[3]
Talbots reported a $171 million loss in the fourth quarter that ended Feb. 2, 2008.[19] Actually the company's crisis marked the peak in 2007, when it reported a loss of $188.8 million and had to struggle for customers against Coldwater Creek Inc. and Macy's Inc. This situation has scared the majority of banks that are pulling back from any lending.[14] The bank added that it will trim an existing facility to $60 million from the current $135 million, and planned to winnow the amount each month until canceling it altogether in August.[17]
The retailer had $35.9 million in cash on hand at the end of February.[15] Linens 'n Things Inc., the home-furnishings retailer taken private by Apollo Management LP, said yesterday it postponed a $16.1 million interest payment and is in negotiations with bondholders as it seeks to raise more cash.[3]
The company reported it had $35.9 million in cash or cash equivalents as of Feb. 3.[8] The extra cash is expected to boost 2008 cash flow to about $200 million.[8]
"With two major banks walking away, it won't be easy and financing will not be cheap," Meyer wrote in a client note. Meyer expects these financing problems to hurt operations, cash and earnings. This also raises questions about how well Talbots can access capital to fund growth, which is needed to improve fundamentals, Meyer said. Talbots is trying to turn around its operations. In January, Talbots revealed plans to shutter 78 children's and men's apparel stores to focus on its core middle-aged female customer. [1] When banks cut off credit, it means retailers have a harder time accessing capital, analysts said. That, in turn, could threaten their ability to receive inventory shipments and force them to close stores and lay off workers.[11] Tuesday, the Hingham, Mass. -based specialty retailer of women's classic apparrel, said it was informed last week by two banks -- The Hongkong and Shanghai Banking Corp. and Bank of America -- that the lenders would not continue providing credit to the retailer.[19]
Talbots Inc., which is counting on an overhaul of its self-described "dowdy" offerings to counter a sharp drop in sales, reported that two banks canceled letters of credit in another sign that the credit crunch is rippling through the economy.[22] The retailer had 1,149 Talbots stores and 273 J. Jill stores as of April 1. Annual sales growth may be 4 percent by 2010 after an increase of 3 percent this year, Talbots said earlier this month.[3] The disclosure, coming as borrowing difficulties and a slowdown in consumer spending have squeezed other U.S. retailers, raised questions about the ability of Talbots to continue borrowing money, purchasing inventory, and paying vendors.[7]
Talbots (NYSE:TLB) stock opened at $12 per share Wednesday and closed at $9.16 per share.[18] NEW YORK (AP) -- Santarus stock is rising after the drug developer ended a partnership with Otsuka America Pharmaceutical.[23] Economist Don Klepper-Smith, research director at DataCore Partners in New Haven and Martha's Vineyard, said retailers have been hurt more than any other industry by the decline in jobs, stock prices, and home values that have squeezed consumers.[11]
Stocks to Watch Today is a daily update on the stocks and market conditions that investors should know about today, written by Barron's Online stocks columnist Bob O'Brien. O'Brien updates this blog and provides video reports several times each trading day with information and analysis. O'Brien is a 14-year veteran of Dow Jones & Co., having most recently worked at Wall Street Journal Television, where he appeared daily on CNBC Television under the Journal's content-sharing agreement with NBC Television.[17]
Our network comprises business and financial news web sites read by millions of business decision-makers around the world. Barron's is America's premier financial magazine, renowned for its market-moving stories and in-depth reporting. [17] Oppenheimer & Co. analyst Roxanne Meyer said the moves by HSBC and Bank of America could make it tough to finance growth needed to turn the company around.[8] The retailer, which has been hit by losses amid falling sales in a weak women's apparel market, said on Tuesday Hongkong Shanghai Banking Corp (HSBA.L: Quote, Profile, Research ) would ratchet down the letter-of-credit facility limit for the company, ending the facility altogether on Aug. 8.[12] Talbots and other women's apparel chains have been struggling as shoppers have become increasingly cost-conscious, and women over 35 turn toward trendier, frequently refreshed fashions and designer knockoffs.[8]
The retailer also has $165 million available to borrow for working capital. [3] High fuel costs offset an increase in revenue and pushed the parent of American Airlines, the nation's biggest carrier, to a $328 million loss in the first quarter. That figure doesn't include a loss "in the high tens of millions" from the cancellations last week of about 3,300 flights while planes underwent safety inspections, executives said.[5]
"The letters of credit and vendor financing are the core of retail liquidity,'' said Jeffrey Bloomberg, a principal at financial advisory firm Gordon Brothers Group LLC in Boston. "They are the first financiers of retail, if you will.'' [3] Losing the letters of credit means that the company won't get required goods from suppliers without up-front cash payments.[14]
SOURCES
1. Talbots down on news that the retailer must find new financing after banks pull credit lines
2. Talbots Stock Tumble After Banks Cancel Credit - International Business Times -
3. Bloomberg.com: Worldwide
4. Talbots shares plunge after banks cancel letters of credit | APP.com | Asbury Park Press
5. National business briefs
6. The Talbots drops as credit dries up
7. Two banks to cut $265m in credit for struggling Talbots - The Boston Globe
8. Talbots shares drop after 2 banks cut off lines of credit | Chron.com - Houston Chronicle
9. Eyewitness News WPRI / FOX Providence - Providence, Rhode Island News, Weather, Traffic and Sports | Talbots shares drop after 2 banks cut off lines of credit
10. Talbots stock shares fall in mid-day trading - Daily Business Update - The Boston Globe
11. Talbots sticking with plan - The Boston Globe
12. UPDATE 2-Talbots' stock whacked after two banks stop credit | ETFs | News | Reuters
13. Talbots says can fund 2008 working capital | Markets | Markets News | Reuters
14. Banks cancel letters of credit to Talbots Inc - Pravda.Ru
15. MarketBeat Blog - WSJ.com : A Sale at Talbots
16. Free Preview - WSJ.com
17. Stocks To Watch Today : Talbots Loses Credit, Fertilizer Trumps China, Blackrock Helps
18. BofA ends $130M credit line with Talbots - Charlotte Business Journal:
19. Talbots stock falls on credit loss news - Boston Business Journal:
20. Option Update: Talbots put volume & volatility spike on Letter of Credit cancellations - BloggingStocks
21. Talbots shares drop on credit woes - BostonHerald.com
22. Free Preview - WSJ.com
23. Movers roundup: Talbots, Intel
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