MarketWatch First Take
Talbots's nasty breakup5/25/12 11:40 AM ET (MarketWatch)Print
NEW YORK (MarketWatch) -- Things just got a lot worse for
After months of fighting off a buyout offer from Sycamore Partners, the women's clothing retailer succumbed earlier this month, reaching a tentative agreement with Sycamore, a buyout firm with a roughly 10% stake in Talbots. Under the terms of the nonbinding deal, which was supposed to expire May 15 but was extended until May 24, Sycamore would pay $3.05 a share for Talbots.
May 24 came and went, and let's just say they're just not into each other anymore.
In a statement, Talbots said it had "worked exclusively in good faith with Sycamore Partners to execute a transaction." Sycamore told Talbots it wasn't prepared to do a deal now, although Talbots is still open to pursuing an "acceptable merger agreement." Ugh, breakups.
Now that it's free of the exclusivity contract, Talbots will play the field, looking for a new partner, creating shareholder value and trying to run its troubled business. Talbots (TLB) shareholders are sorely in need of some value. The shares are down more than 34% at $1.68. Read more about the decline of Talbots.
Meanwhile, Talbots also released its fiscal first-quarter results. Net income rose, but sales and same-store sales declined, and the company provided details on its store "rationalization" plan, cost cuts and said it's still looking for a new president and chief executive.
Talbots has been struggling for a while. It's tried changing its merchandise and marketing, complete with celebrity models. It has tried to attract a younger, more fashionable shopper. It tried to cater to its "legacy" customer. It closed stores. It shuffled top executives. Talbots may be running out of tricks.
While most of us won't know why Talbots and Sycamore didn't consummate their deal, the upshot is Talbots ends up looking like damaged goods.
-- , commentary editor