Talbots gives up on Sullivan, starts search for new CEO
(Reuters) - Talbots Inc TLB.N said it is looking for a new chief executive to replace Trudy Sullivan, who had unsuccessfully tried to revive the women's apparel chain with new store formats, cost cuts and by chasing a younger clientele.
The stock jumped 8 percent on the news, which came after Talbots last week warned that this holiday shopping season would be challenging as big discounts are expected to hurt profit margins. It had also announced it was cutting 9 percent of jobs and pulling national advertising campaigns.
Investors hope a successor to Sullivan, who has been CEO since 2007, would be able to shed Talbots' stodgy pearls-and-classics image and boost sagging sales.
Sullivan, 61, who will exit Talbots by the end of June, will take home $5 million in cash, along with other benefits.
Talbot's stock performance during Sullivan reign: link.reuters.com/zan45s</A1 >
Talbots has formed a committee of independent board members and hired executive search firm Spencer Stuart to find a replacement for Sullivan.
"People who hold the stock need, not just management change, but some actual improvement in the business before people can feel any better about the stock," Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago said.
North Star, which held a small stake in Talbots at the beginning of the year, has since exited the stock, citing its impatience with the lack of progress at the company.
"We usually are long-term investors, but the news flow was so much worse than our expectations that we exited quickly," Kuby said.
Hingham, Massachusetts-based Talbots, which was once a popular destination for its classic fashions, has been consistently lagging peers Ann Inc (ANN.N) and Chico's FAS Inc
Shares of the retailer, which operates 551 stores in the United States and Canada, were trading at $1.65 on the New York Stock Exchange, a fraction of the $30-levels they traded at 10 years ago. They had closed at $1.99 on Wednesday, a day before the company reported another quarter of disappointing results.
(Reporting by Nivedita Bhattacharjee in Bangalore, additional reporting by Ranjita Ganesan, Editing by Sreejiraj Eluvangal, Saumyadeb Chakrabarty)
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