Talbots Case

Topics: Retailing, Sales, Talbots Pages: 11 (3976 words) Published: November 12, 2008
History and Background
In 1947, Rudolph and Nancy Talbot opened the first Talbots store in Hingham, Massachusetts. Additional stores were opened by 1955 and by 1973 and there were a total of five stores when General Mills acquired Talbot. Pursuing a nonfood diversification strategy, General Mills also purchased another specialty retailer, Eddie Bauer, after a sinking stock market had torpedoed Bauer’s planned stock floatation in 1971. During the 1970s and 1980s, General Mills aggressively pursued growth strategies for both Talbots and Eddie Bauer, driven primarily by retail store expansions. Bauer, headquartered in Seattle, Washington, had a strong catalog operation and 58 stores in 14 states by 1988. During this expansionary period, Eddie Bauer added casual clothing to its assortments in addition to its traditional strength in outdoor sporting equipment. Bauer’s original assortments were replaced by faster- moving streetwear clothing. They faced new competitive environment by putting new stores into shopping malls. While Bauer had seen stores grow from 1-58 locations from 1973 -1988, Talbots saw its store count grow from 5 to 137, with sale of $392 million. By 1988, General Mills sold off its nonfood operations. Talbots was acquired by JUSCO for $325 million. JUSCO was best known for its superstore and specialty stores, as well as for restaurants and other nonstore retailing ventures. JUSCO is an international Japanese retailer with sales of $7.6 billion. Three Philosophies were central to JUSCO’s operations. The first was “the customer is first” – in order to be successful, it was essential to think and act from the point of view of the customer. The second philosophy was the need to respond quickly to changes and challenges. I was figuratively described as “putting wheels on the central pillar.” Generally, the central pillar was the key supporting structure and was always anchored. To put wheels on the central pillar suggested that the “house” should be ready to move at all times to another location that offered greater benefits, just as a company should always be flexible and able to adapt to the changing needs of the market. JUSCO’s third operating philosophy focused on its management operations, which it described as an international federation with a “spirit of autonomy and responsibility,” wherein decision-making was decentralized into each of the operating businesses, striving to achieve an “autonomy of parts” along with a “harmony of the whole”. In September 1989, these philosophies were re-affirmed when JUSCO changed its name to the AEON group. Talbots introduced Talbots Intimates, offering lingerie and nightwear in 1991. This was part of Talbots’s continuity to experiment with other concepts designed to serve its customers. But although the concept had expanded to 4 stores by 1997, Talbots determined it had limited growth potential and phased out the separate offering. By 1993, Talbot launched IPO with JUSCO USA continuing to own approximately 63.4% of Talbots stock. The event marked the first Japanese-owned U.S. company to go public. This was a move that was consistent with JUSCO’s other subsidiaries. After a difficult 1997, when Talbots had changed its assortments and styling to attract a broader customer base and seen its net income per share plummet from $1.91 to $0.18, it refocused itself on its traditional strength – classic clothing targeted at women 35-55. Loyal customers returned and, with them, net income per share soon rebounded to $1.15 for 1998, with Wall Street earnings expectations for 1999 set at $1.82. In 1998, Talbot launched Talbot Woman, targeted at customers wearing sizes 12W to 24W who wanted the same classic styling, quality, and fit around in the Talbots Misses and Petites stores. The stores were the primary revenue drivers for Talbots, generating $973 million in sales and $19 million in direct operating profit for 1998. After just the third quarter of 1999, sales had reached...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Customer and Talbot Essay
  • Essay on Case Assignment 1
  • Essay about Kensington Tablet Cases Make Holiday Shopping a Snap
  • A Case Study of Wal-Mart Essay
  • McDonald's Hot Coffee Case Essay
  • Case Process Research Paper
  • Case Management Essay
  • Cold Case Investigation Essay

Become a StudyMode Member

Sign Up - It's Free