Janney Montgomery Cuts Estimates on Talbots (TLB) Following Q1 Conference, Maintains Sell Rating

Janney Montgomery Scott is maintaining its Sell rating and fair value estimate of $3 on shares of Talbots (NYSE: TLB) following the release of its Q1 results and press conference.

While the company beat the Street's EPS expectations, store comps came in at a loss of 7.7 percent, well below the Retail Metrics consensus of a loss of 5.6 percent. The 7.7 percent loss includes DTC, and without DTC the loss would have rose to 8.2 percent.

TLB did not release any Q2 guidance but noted that gross margin is expected to fall 1000 bps while sales are trending down to the low-teens.

The firm reports, "We point out that the current product through fall was largely the hand of the exiting chief merchant and that CEO Trudy Sullivan has stepped in to lead the merchandising of the fall-season product. We credit the management team with continuing to pursue their longer-term strategy, but believe the environment will make it increasingly difficult to execute to plan."

Janney is lowering its FY11 EPS estimates from ($0.04) to ($0.29) and its FY12 from $0.17 to $0.04.

For more ratings news on Talbots click here and for the rating history of Talbots click here.

Shares of Talbots closed at $4.42 yesterday.

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