On a reported (GAAP) basis, second quarter net loss from continuing operations was $20.5 million or $0.38 per share, including restructuring and impairment charges of $2.9 million, or $0.05 per share, compared to last year's net loss of $12.0 million or $0.22 per share for the thirteen week-period ended August 2, 2008, including restructuring and impairment charges of $2.5 million or $0.05 per share.

Trudy F. Sullivan, Talbots President and Chief Executive Officer, commented, "It is important to note that we are beginning to see greater benefit from the strategic initiatives we put in place. We ended the second quarter with a substantial reduction in operating expenses and a solid increase in merchandise margin, all of which contributed to a significantly better-than-expected bottom line performance. We are especially pleased with our inventory position as we enter the third quarter."

Highlights

Adjusted loss per share from continuing operations of $0.33, which excludes restructuring and impairment charges, was well ahead of Company's guidance of $0.50 to $0.58 loss per share;

Pure merchandise gross margin increased 230 basis points compared to last year's second quarter, primarily due to improved sourcing business practices and strong inventory management;

SG&A expenses decreased 50 basis points compared to last year's second quarter, reflecting a $30 million, or 24% decline in expenses, primarily in the areas of payroll and employee benefits, and other corporate overhead expenses;

Total ending inventory from continuing operations decreased 29% compared to last year's second quarter, a 28% decline on a per square foot basis;

Company encouraged by positive customer response to fall merchandise, with improved selling trends continuing into September. While the Company is still experiencing negative comparable store sales quarter to date, Talbots trend is substantially improved from second quarter.

Total sales from continuing operations for the thirteen weeks ended August 1, 2009 were in line with the Company's expectations and were $304.6 million compared to last year's sales of $395.2 million. Retail store sales for the thirteen weeks were $254.8 million compared to $334.3 million last year. Comparable store sales declined 24.9% for the thirteen week period.

Direct marketing sales for the thirteen-week period were $49.8 million, including catalog and Internet, compared to $60.9 million last year.

Results for the Six-Month Period

For the six-month period, net loss from continuing operations on an adjusted basis, excluding the restructuring and impairment charges, was $30.0 million or $0.56 per share, compared to last year's net income of $12.3 million or $0.22 per share on a comparable basis.

Net loss from continuing operations on a reported (GAAP) basis was $39.3 million or $0.73 per share, including restructuring and impairment charges of $9.3 million or $0.17 per share, compared to last year's net income from continuing operations of $6.6 million or $0.12 per share for the six-month period ended August 2, 2008, including restructuring and impairment charges of $5.7 million or $0.10 per share.

Total sales from continuing operations were $610.8 million for the first half of the year, compared to last year's sales of $810.0 million. Retail store sales were $511.2 million compared to $679.4 million last year. Comparable store sales declined 25.9% for the six-month period. Direct marketing sales for the six-month period were $99.6 million, including catalog and Internet, compared to $130.6 million last year.

Other Corporate Initiatives

Sale of J. Jill -- During the second quarter, Talbots announced that it had completed the sale of J. Jill to Jill Acquisition LLC, an affiliate of Golden Gate Capital, a San Francisco-based private equity investment firm.

Li & Fung Agreement -- Talbots announced in August its buying agency agreement with an affiliate of Li & Fung Ltd., whereby Li & Fung will act as exclusive global apparel sourcing agent for substantially all Talbots apparel. Talbots anticipates that this partnership will simplify and centralize its sourcing activities, further reduce its costs of goods sold and internal operating expenses and improve time to market. Talbots will maintain complete control of all creative and product design and ensure that its quality remains the very highest. The Company is on track to complete the transaction by mid-September and Li & Fung will assume responsibilities for orders shortly thereafter.

Re-Launched Website -- Talbots recently unveiled the re-launch of its website with new functionality, features and personalization. With a sophisticated look and easy navigation, the updated site is designed to improve the online shopping experience. In addition, the new web platform further allows Talbots to deliver targeted promotions and recommendations on timely, relevant products to its customers.

Upscale Outlet Concept -- The Company launched its upscale outlet concept in May 2009, offering merchandise manufactured exclusively for this business at very attractive price points. With the addition of this concept, Talbots is tapping into a new customer base who shops almost exclusively at outlet centers. Talbots ended the second quarter with a total of 10 upscale outlets and has added over 3,000 new customers to its customer file. The Company plans to end the year with a total of 18 upscale outlets, including seven conversions of existing stores. The Company continues to view its upscale outlet concept as a significant growth vehicle, with the potential to open 75 to 100 stores.

Store Productivity Initiative -- Talbots implemented a set of key initiatives designed to further enhance customer service and drive improved in-store productivity. In late August, the Company rolled out to all stores a new selling skills program to reinvigorate the selling culture, introduced a new incentive program for store associates, and formalized the productivity standard to measure store associates' performance. These actions are expected to foster a stronger relationship with customers and create a positive and compelling shopping environment that should positively impact Talbots top-line performance.

Outlook

Ms. Sullivan concluded, "While we believe the retail environment will remain challenging throughout the back half of the year, we are encouraged by the positive customer response to our fall merchandise. We will continue to aggressively manage those areas within our control and anticipate ongoing improvements to SG&A expense and merchandise margin in the second half of the year. We are making good progress in our goal to achieve $150 million in annualized cost reduction over two years and at this time have identified approximately $135 million to be realized in fiscal 2009."

The Company currently expects to report a loss from continuing operations in the third quarter in the range of approximately $0.24 to $0.30 per share, excluding restructuring and impairment charges. This anticipated result is based on a top-line sales decline planned to be in the range of approximately 14% to 17%.

The above outlook is based on the Company's current internal assumptions and estimates, is subject to its accompanying forward-looking statement and is not a guarantee of future performance.

Conference Call Details

As previously announced, Talbots will host a conference call today, September 9, 2009, at 10:00 a.m. local time to discuss second quarter 2009 results. To listen to the live call, please dial 866-336-2423, passcode "TLB" or log on to www.thetalbotsinc.com/ir/ir.asp. The call will be archived on its web site www.thetalbotsinc.com for a period of twelve months. In addition, an audio replay of the call will be available shortly after its conclusion and archived through September 11, 2009. This archived call may be accessed by dialing (800) 642-1687; passcode 28575065.

The Talbots, Inc. is a leading specialty retailer and direct marketer of women's apparel, shoes and accessories. At the end of second quarter 2009, the Company operated 588 Talbots brand stores in 46 states, the District of Columbia, and Canada. Talbots brand on-line shopping site is located at www.talbots.com.

Cautionary Statement and Certain Risk Factors to Consider

In addition to the information set forth in this press release, you should carefully consider the risk factors and risks and uncertainties included in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as well as in this press release below.

This press release contains forward-looking information within the meaning of The Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as "expect," "achieve," "plan," "look," "believe," "anticipate," "outlook," "will," "would," "should," "potential" or similar statements or variations of such terms. All of the information concerning our outlook, future financial performance, results or conditions, future credit facilities and availability, future merchandise purchases, future cash flow and cash needs, and other future financial performance or financial position constitutes forward-looking information. Our forward looking statements are based on a series of expectations, assumptions, estimates and projections about the Company, are not guarantees of future results or performance, and involve substantial risks and uncertainty, including assumptions and projections concerning our internal plan, regular-price and markdown selling, operating cash flows, liquidity, and funds available under our credit facilities for all forward periods. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the following risks and uncertainties:

the material impact on our business, continuing operations and financial results of the significant deterioration in the U.S. economic environment, including continued substantial negative impact on consumer discretionary spending and consumer confidence, substantial loss of household wealth and savings, the disruption and significant tightening in the U.S. credit and lending markets, potentially long-term unemployment levels, and fluctuations in the value of the U.S.