More Trouble for Talbots
Talbots, the classic, Hingham-based women’s clothing line which has been struggling as of late, took yet another financial hit today with the release of its first quarter earnings report that has the business sector using ominous words like “slump,” “tank,” and “plummet” to describe the stock’s rapid descent. Despite posting a marginal profit, the Talbot’s stock has plunged 37 percent in the hours following the announcement, thanks in large part to the acknowledgment on the part of CEO Trudy Sullivan that the company’s second quarter expectations are even more dismal than their first.
“Our first quarter performance reflects an inconsistent customer response to our merchandise assortments, a challenging competitive environment and high levels of promotional activity,” Sullivan said. “We have been vigorously addressing our challenges, while continuing with the implementation of our key long-term initiatives. Our focus has been on directing our merchandise strategies to deliver a stronger balance of classic versus fashion forward styles in our assortments and implementing broader based marketing initiatives that better connect with our core and target customers to drive top-line growth.”
But it doesn’t seem to be working. “I think despite all the efforts to make Talbots new and fresh again, it’s pretty obvious that Trudy Sullivan is stuck in a different era,” says Lauren Sherman, Executive editor of Fashionista.com. “Sure, it’s a transitional year in terms of strategy, but this is the time when a brand should be bouncing back from recessionary woes. People want to spend money. They need to act fast, mix up the assortment, and keep it classic enough as not to alienate what’s left of the core audience.”
Things aren’t looking so hot for Sullivan herself either, what with the Talbots shareholders’ rejection of the company’s executive compensation plan by a 2.5 million vote margin last week. Sullivan takes home an annual salary of over $1 million in base pay, that’s not including stock awards and non-equity incentive plan compensation, reports the Motley Fool, which singled Sullivan out last week and revealed their “sneaking suspicion that Sullivan might be overpaid.” Talbots, for their part, claim that Sullivan’s compensation is based on comparisons with competitive brands in their “peer pool” like Tiffany and Williams Sonoma, which the Fool suggests is a bit aspirational at best. What’s more, Talbots hasn’t increased annual sales since Sullivan came on board in 2007, which in all likelihood played a role in the stockholders decision to neg on her compensation package.
“It’s just bad form,” Sherman says of the pay structure. “They’re losing money, and she keeps making more. She’d be much better off taking some sort of pay cut, even if it’s just a minor one. Shareholders aren’t going to put up with that.”
Meanwhile, the ardent fans on the Talbots Facebook page are planning mutiny of sorts, with some women (who are also shareholders) hoping to contact the company directly to express their frustration with the brand. A letter, posted today by one fan reads:
Dear Mrs. Sullivan,
You have a brand loyal, dedicated customer base who is expressing their concerns over quality and a departure from the name and chic style the Talbot’s name became an icon for.
You have an opportunity to utilise the social media to incorporate and interact with this brand loyal core of dedicated customers to listen and truly hear them, to address their concerns and to understand that in order to truly turn a company around, the single best asset and CEO and/or Creative Director can possess is just that, a loyal, dedicated customer base.
Please listen to, hear and solicit our comments, as no one of us is more committed to turning this company around as those of us who epitomise the very image you are attempting to retain.
Yet so far, the wizards of the Facebook page have yet to respond.