Shares of apparel retailer The Talbots (TLB) are on the move after the company delivered a surprise Q3 profit despite missing sales estimates.� Talbots also announced a merger and new financing to clean up its balance sheet.
Q3 revenue of $309 million was below the roughly $318 million estimate, but profit per share of 28 cents, including restructuring costs, compared to the 14-cent loss estimate of analysts. The company shaved quite a bit off of sales costs and G&A, but also restructuring costs and impairment costs were way down from a year earlier.
Talbots said it will merge with BPW Acquisition (BPW), a “blank check” company that has about $350 million, in a stock-swap at a rate of .9 to 1.3 shares of Talbots for each share of BPW. The cash will allow Talbots to pay down debts, and it will put BPW shareholders in the driver’s seat with about 69% ownership of Talbots common stock. In conjunction with that deal, the company also announcedit would buy out majority stakeholder AEON, Inc., and would receive a new $200 million line of credit from GE Capital Finance.
Talbots shares are up $1.01, or 14%, at $8.22, while BPW stock is up 14 cents, or 1.4%, at $9.99.
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