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Arnold B. Zetcher
Chief Executive Officer
Talbots Inc. (The)
Talbots Inc. (The) uses the new U.S. Securities and Exchange Commission (SEC) executive compensation rules.


2006 Compensation

 

SEC Total

AFL-CIO Total*

 

 

 

 

Salary

$1,197,792

Salary

$1,197,792

Bonus

$0

Bonus

$0

Vested Stock Awards

$990,863

Grant Date Fair Value of Stock and Option Awards

$2,623,500

Vested Option Awards

$2,049,979

Non-Equity Incentive Plan Compensation

$359,300

Non-Equity Incentive Plan Compensation

$359,300

Change in Pension Value and Non-Qualified Deferred Compensation Earnings

$0

Change in Pension Value and Non-Qualified Deferred Compensation Earnings

$0

All Others

$395,433

All Others

$395,433

SEC Total

$4,993,367

AFL-CIO Total*

$4,576,025


Total Lump-Sum Present Value of Pension According to SEC: $5,927,930

* The AFL-CIO Total is calculated as originally proposed by the U.S. Securities and Exchange Commission (SEC) in its initial 2006 rule making on executive compensation disclosure. See article. On Dec. 22, 2006, the SEC amended the disclosure rules for stock options and other equity awards. Under this change, companies are required only to include the value of equity awards that vest during the fiscal year instead of the full value that are granted to executives. The SEC Total follows the approach used by the Financial Accounting Standards Board in determining the amount of options to be expensed in a company’s financial statements. In order to show the full value of equity awards granted to executives, the AFL-CIO Total includes the Grant Date Fair Value of Stock and Options Awards as found in the Grants of Plan-Based Awards table of the company’s proxy statement. The AFL-CIO believes this total calculation better represents the full value of compensation awarded to executives as decided by the board of directors during the fiscal year in question. The AFL-CIO Total follows the method the SEC has historically used in disclosing options granted to executives. 


CEO-to-Worker Comparisons

 

 

Annual

Weekly

Daily

Hourly

Per Minute

 

SEC Total

AFL-CIO Total

SEC Total

AFL-CIO Total

SEC Total

AFL-CIO Total

SEC Total

AFL-CIO Total

SEC Total

AFL-CIO Total

Arnold B. Zetcher

$4,993,367

$4,576,025

$96,026

$88,000

$19,205

$17,600

$2,400

$2,200

$40

$36

Minimum Wage Worker

$12,168

$12,168

$234

$234

$46

$46

$5

$5

$0.08

$0.08

Average Worker

$29,529

$29,529

$567

$567

$113

$113

$14

$14

$0.23

$0.23

U.S. President  

$400,000

$400,000

$7,692

$7,692

$1,538

$1,538

$192

$192

$3.20

$3.20

 


How Many Years to Equal Arnold B. Zetcher’s 2006 Compensation?

 

Using the SEC Total

Minimum Wage Worker

410 years

Completion Date

2417 A.D.

Average Worker

169 years

Completion Date

2176 A.D.

U.S. President

12 years

Completion Date

2019 A.D.

 

Using the AFL-CIO Total

Minimum Wage Worker

376 years

Completion Date

2383 A.D.

Average Worker

154 years

Completion Date

2161 A.D.

U.S. President

11 years

Completion Date

2018 A.D.

 

 

Financial Statements for The Talbots Inc.

Year over year, The Talbots Inc. has seen their bottom line shrink from $93.2M to $31.6M despite an increase in revenues from $1.8B to $2.2B. An increase in the percentage of sales devoted to SGA costs from 27.80% to 29.86% was a key component in the falling bottom line in the face of rising revenues.

 

 

TLB Investment Growth

 

 

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The Talbots Inc. Enters into Second Amendment to its Term Loan

01/7/2008

On December 31, 2007, The Talbots Inc. entered into a second amendment to its term loan, dated July 24, 2006, among Talbots, certain specified lenders and Mizuho Corporate Bank Ltd., as arranger and administrative agent. The Loan Amendment has an effective date of January 4, 2008. Under the terms of the Loan Amendment, the Lenders have permitted Talbots to transfer certain assets to The Talbots Group, Limited Partnership in connection with the restructuring of Talbots and its subsidiaries. On December 31, 2007, Talbots Group, Limited Partnership executed a Guaranty for the benefit of the Lenders, thereby guaranteeing performance by Talbots Group, Limited Partnership of the obligations and covenants as set forth in the Term Loan Agreement.




 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20509

 

Section 5 - Corporate Governance and Management

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Employment Agreement and Grant Agreements with Trudy F. Sullivan

As previously announced by The Talbots, Inc. (the “Company”) on June 28, 2007, Trudy F. Sullivan was appointed as President and Chief Executive Officer and as a member of the Board of Directors of the Company effective on August 6, 2007. The Company previously reported in its Current Report on Form 8-K filed on July 5, 2007 (“July 5, 2007 Form 8-K”) the terms and conditions of Ms. Sullivan’s employment and related compensation arrangements. The definitive employment agreement setting forth those terms and conditions was executed on August 6, 2007.

In addition, as previously described in the July 5, 2007 Form 8-K and consistent with her employment agreement, the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) approved the equity grants to Ms. Sullivan effective August 7, 2007 evidencing the (i) 350,000 shares of restricted stock and (ii) 325,000 stock options in connection with Ms. Sullivan’s appointment as President and CEO. The stock option includes a tandem stock-settled stock appreciation right feature exercisable solely by the Company, as previously described. The stock option exercise price is $22.70 per share, which was the NYSE closing price of Talbots common stock on the date of the August 7, 2007 option grant.

Transition Matters in Connection with Arnold B. Zetcher

The Company also previously reported in its July 5, 2007 Form 8-K that, in connection with the appointment of Trudy F. Sullivan as President and Chief Executive Officer of the Company and as a member of the Board of Directors effective August 6, 2007, Arnold B. Zetcher would cease as President and Chief Executive Officer of the Company effective August 6, 2007. He will continue as Chairman of the Board and as a director up until March 31, 2008. His existing employment agreement, which was modified in September 2006 in connection with the Company’s CEO succession planning process, has a term expiring on March 31, 2008 and provides compensation and severance protection for Mr. Zetcher up to March 31, 2008 (which is the expiration date of this modified employment agreement). The terms of his September 2006 modified employment agreement are generally described in the Company's Current Report on Form 8-K filed on September 29, 2006.

In connection with Mr. Zetcher’s transition from the President and Chief Executive Officer position, his continuation as Chairman of the Board and as a director until March 31, 2008, and his availability for Company management consultation through the end of fiscal 2007, the Company has also agreed to provide Mr. Zetcher (i) continued use by the executive and his spouse of the Company aircraft through the end of the Company’s 2007 fiscal year in connection with Board, CEO transition and National Retail Federation (NRF) activities as well as certain limited personal use, (ii) continued participation in his current executive medical and dental plan and executive automobile program through the end of fiscal 2007, (iii) reimbursement of travel and out-of-pocket expenses in connection with Talbots Board of Directors and NRF activities for the executive and  


 

spouse up until March 31, 2008, (iv) continuation of secretarial and other technology, communications, and administrative support up until March 31, 2008 and (v) retention of his computer, fax and related telecommunications equipment. The three year option exercise period applicable upon retirement for his outstanding stock options will commence at the end of fiscal 2007 (but in no event will the exercise period continue beyond the original expiration date of any such outstanding option).

Executive Severance Arrangements

On and effective August 6, 2007, the Compensation Committee approved a severance program for senior executives of the Company and its subsidiary The J. Jill Group, Inc. (“J. Jill”) at the level of Vice President and above and who are not already parties to an existing employment and/or severance agreement with the Company or J. Jill with more advantageous terms for the executive. Under this program, covered executives will be entitled to severance protection between a range of 1.5 times base salary and 0.5 times base salary, plus continuation of health and welfare benefits for the applicable severance period at the executive’s same participation rate. With respect to our covered named executive officers, Michele M. Mandell, Executive Vice President, Stores, Talbots Brand, will be entitled to 1.5 times base salary, and Edward L. Larsen, Senior Vice President, Finance, Chief Financial Officer and Treasurer, will be entitled to 1.0 times base salary under this program. This severance arrangement will cover an employment termination by the Company without “cause” or by the covered executive for “good reason” provided such employment termination occurs within two years of the effective date of this program.

 

 

COPYRIGHT 2007 Business Wire

Company Updates Full Year 2007 Outlook

HINGHAM, Mass. -- The Talbots, Inc. (NYSE:TLB) today announced results for the thirteen-week period ended May 5, 2007. Net income for the first quarter was $5.2 million or $0.10 per share on a reported basis and includes acquisition related costs and adjustments of approximately $0.13 per share. Excluding the acquisition related costs, earnings per diluted share were $0.23 for the combined company. This combined company result includes a first quarter loss for the J. Jill brand of $0.09 per share, and a profit for the Talbots brand of $0.32 per share, compared to $0.51 reported last year for the Talbots only brand.

Total consolidated Company sales for the quarter were $573.6 million. By brand, retail store sales were $387.4 million for Talbots compared to $384.9 million last year, and were $80.6 million for J. Jill. Consolidated direct marketing sales were $105.6 million including catalog and Internet.

Total Company comparable store sales declined 3.5% for the thirteen-week period. By brand comparable store sales for Talbots decreased 3.9%. For the J. Jill brand, comparable store sales decreased 1.2% in the period.

Arnold B. Zetcher, Talbots Chairman, President and Chief Executive Officer, commented, "Although our results were in line with our previously revised expectations, we are clearly disappointed in our first quarter performance. We had been encouraged by the strength of our Talbots brand regular-price selling trends in March, particularly in weeks two through four, with regular-price comps in the high double digit range. However, as was the case with most retailers, we experienced a significant decline in sales in April due to adverse weather, the Easter shift and possibly, a broader-based consumer slowdown.

"For the Talbots brand, sales were further impacted by a weaker than anticipated customer response to our casual merchandise.

"For the J. Jill brand, our overall comparable store sales performance was in line with our previously revised outlook, but below our initial plan. We did see stronger customer acceptance of our merchandise offering as we moved further into the quarter, which resulted from our new merchandising team's ability to make some adjustments to our late spring deliveries. We believe we are on the right track with the disciplines and initiatives we have put in place to improve the performance of this business."

Mr. Zetcher noted, "As previously stated, the Company has greatly enhanced its Talbots brand traffic driving events for the remainder of the spring season to help drive increased momentum in the business. Additionally, the J. Jill brand will be presenting a broader selection of apparel developed by its new merchandising team beginning this month, as well as more effective marketing and promotional events.

"Total Company direct marketing business, including catalog and Internet increased 55% in the first quarter, and include the additional sales of the J. Jill brand, which were not in last year's results. While outperforming stores, our direct business, for The Talbots brand specifically, was negatively impacted by the same factors that affected our store traffic and sales. For J. Jill, the direct business continues to be very difficult, with catalog performance significantly below our initial plan. It does take longer to rebuild this channel, and we believe many of our initiatives, including improved product and enhanced catalog presentation, will be more beneficial beginning in the second half of the year."

Mr. Zetcher continued, "Our store expansion program is on target. We opened 8 Talbots stores and 10 J. Jill stores during the quarter. At the end of the period, we had a total of 1,381 stores, which included 1,132 Talbots stores and 249 J. Jill stores. We remain on track to open 11 new stores and close three in the second quarter, ending the first half of the year with approximately 1,389 total stores."

Second Quarter and Full Year Comments

Mr. Zetcher added, "Since the beginning of May, we have been experiencing stronger selling trends at both brands. Nonetheless, we are cautious regarding the second quarter, particularly given a weaker than anticipated April and a very uncertain environment.

"However, we are optimistic for a stronger performance in the second half of the year. We believe our merchandise assortments will be more in line with what our customer is looking for, and our inventory commitments will be appropriately scaled back to minimize markdown exposure.

"That said, at this time our current outlook for total company full year 2007 earnings per share will be in the range of $0.70 - $0.80, in line with the current First Call consensus estimate. We will wait until we are further into the period to provide additional details regarding our outlook for second quarter sales and earnings.

"In closing, we are pleased that our current sales trends are stronger and we remain focused on taking the necessary actions to continue to improve the performance of both brands. Our J. Jill integration is on track and are beginning to benefit from the $36 million in cost saving synergies planned in fiscal 2007," concluded Mr. Zetcher.

As previously announced, Talbots will host a conference call today, May 23, 2007 at 10:00 a.m. local time to discuss first quarter 2007 results. To listen to the live web cast please 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 until May 25, 2007. This call may be accessed by dialing (877) 519-4471, passcode 8815864.

The Talbots, Inc. is a leading international specialty retailer and cataloger of women's, children's and men's apparel, shoes and accessories. The Company currently operates a total of 1,385 stores in 47 states, the District of Columbia, Canada and the U.K., with 1,134 stores under the Talbots brand name and 251 stores under the J. Jill brand name. Both brands target the age 35 plus customer population. Talbots brand on-line shopping site is located at www.talbots.com and the J. Jill brand on-line shopping site is located at www.jjill.com.

The foregoing 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," "look," "believe," "anticipate," "outlook," "will," "would," "would yield," or similar statements or variations of such terms. All of the "outlook" information (including future revenues, future comparable sales, future earnings, future EPS, and other future financial performance or operating measures) constitutes forward-looking information.

Our outlook and other forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our Company which involve substantial risks and uncertainty, including assumptions and projections concerning integration costs, purchase-related accounting adjustments, acquisition synergies and, for each of our brands, store traffic, levels of store sales including meeting our internal plan and budget for regular-price selling and markdown selling for the indicated forward periods, and customer preferences. All of our outlook information and other forward-looking statements are as of the date of this release only. The Company can give no assurance that such outlook or expectations will prove to be correct and does not undertake or plan to update or revise any "outlook" information or any other forward-looking statements to reflect actual results, changes in assumptions, estimates or projections, or other circumstances occurring after the date of this release, even if such results, changes or circumstances make it clear that any projected results will not be realized.

Any public statements or disclosures by us following this release which modify or impact any of the outlook or other forward-looking statements contained in or accompanying this release will be deemed to modify or supersede such earlier outlook or statements.

Our forward-looking statements involve substantial known and unknown risks and uncertainties as to future events which may or may not occur, including acceptance of the Company's fashions including its seasonal fashions, effectiveness of the Company's brand awareness and marketing programs, any different or any increased negative trends in its regular-price or markdown selling, success of our expected marketing events in driving store traffic and store and direct marketing sales, success of our catalogs in driving both our direct marketing sales and in driving store traffic, the risk that the J. Jill merchandise changes will not be well accepted, the Company's ability to anticipate and successfully respond to constantly changing customer tastes and preferences and to produce the appropriate balance of merchandise offerings, the Company's ability to sell its merchandise at regular prices as well as its ability to successfully execute its sale events including the timing and levels of markdowns and appropriate balance of available markdown inventory, our ability to accurately estimate and forecast future full-price and markdown selling for each of our brands, the risk that the J. Jill business will not be successfully integrated, the risk that the cost savings, operational efficiencies, and other synergies from the transaction may not be fully realized or may take longer to realize than expected, the risk associated with integrating and operating profitably and successfully as a multi-brand chain for the first time, the risk that the acquisition will disrupt Talbots or J. Jill's core business, the reaction of Talbots and J. Jill customers and suppliers to the changes being made within the organization as a result of the transaction, diversion of management time on acquisition-related issues, effectiveness and profitability of new concepts, the risks associated with our current announced search for a successor for our chief executive officer and the risks associated with a CEO succession, any difference between estimated and actual stock option expense, and retail economic conditions including consumer spending. In each case, actual results may differ materially from such forward-looking information.

Certain other factors that may cause actual results to differ from such forward-looking statements are included in the Company's periodic reports filed with the Securities and Exchange Commission and available on the Talbots website under "Investor Relations" and you are urged to carefully consider all such factors.

 

 

 

June 2007 Fairchild Publications, Inc.

Byline: David Moin

Twenty years ago, Talbots Inc. found the perfect fit, or as good as it gets in fashion retailing.

The company hired Arnold B. Zetcher as president, a man as understated as the brand and from the Midwest, where Talbots often sells best.

Zetcher was running the John Breuner furniture store in San Francisco, where practically no one had heard of Talbots, then just a 108-unit chain. But the fit was snug. Zetcher became Talbots' chief executive officer a year later, and added the chairman's title in 2000.

"I remember the first two stores I opened were in St. Louis, my hometown," Zetcher said, during a wide-ranging interview at the Hingham, Mass. headquarters. "One is in Plaza Frontenac. It's been number-one in the whole company almost every year. That's neat.

"It has every one of our concepts in that store," including misses' and petites, which were part of the original assortment that subsequently expanded with accessories, shoes, kids', plus-sizes and men's wear. "Even today, people that I went to high school with stop by the store and say, 'tell Arnie hello.' I haven't been called Arnie since high school. I even have a card from Bubbles - we knew her as Bubbles. She stopped by the store last month and left her card. That's kind of funny."

There's another hint of irony and sentiment in Zetcher's voice, as he discusses Washington University in St. Louis, his alma mater, where he's on the board of trustees. "I actually spoke at one of the commencements for their business school a couple of years ago. It was one of these amazing things because after doing all these pranks and stuff in school, you think they'll never want you back," he said. He has recently addressed the students at Harvard Business School and other institutions as well. "They always want to know how you got to where you are, and they want to hear something complicated. But my answer is so simple. I say hard work."

The 66-year-old Zetcher plans to retire in 2008 after leading Talbots for 20 years, ending one of the most enduring and impressive runs in retailing, particularly considering the turbulent nature of the industry and its high rate of executive turnover. He'll continue as ceo and president until Feb. 2, and chairman through March, but he's already said he could vacate the ceo slot sooner, depending on when a successor is found.

Zetcher's stewardship was eventful. The chain grew to nearly 1,400 units, with locations chosen based on where the company found its catalogue sales to be the strongest. Rooted in New England tradition and founded in Hingham, Talbots is naturally concentrated in the Northeast, though California boasts the most locations, with 82. Other states with large store counts are Texas, Florida, Massachusetts, New York and Pennsylvania. Catalogues are considered Talbots' number-one advertising vehicle, aside from the company's knack for placing new locations in fertile areas.

When Zetcher joined Talbots, it was primarily a misses' business, with a petite business that was winding down. One of his first strategic moves was to put petites back on a growth track to the point where the category became a core business. Currently, the misses'-petites component accounts for 79 percent of Talbots' total volume. During the Zetcher regime, accessories, shoes, kids, plus-sizes and men's wear were introduced. Accessories and shoes represent 8 percent of total volume; large sizes 4.5 percent, and men's wear 1 percent.

Zetcher did much more. He took Talbots public; expanded the chain internationally; enabled it to become truly multichannel with the addition of Internet selling in 1999, and last year led the purchase of J. Jill Group Inc., the company's first and only brand acquisition. The move gives Talbots a vehicle for further growth and establishes a precedent for possibly buying more brands in the future, though the company has its hands full with assimilating and turning around J. Jill.

Through steady growth, Zetcher methodically and cautiously built Talbots into an all-American brand with a solid infrastructure to accommodate Talbots subbrands and non-Talbots brands. Yet Talbots by itself, Zetcher believes, still has growth opportunities. He said 40 stores are opening this year, along with 30 J. Jill units. "I don't think Talbots will ever be tapped out," Zetcher said. "There are always fill-in opportunities."

Large sizes, he said, represent the fastest growth vehicle currently, in part because it's been an under-served segment. He also sees potential for Talbots to develop additional product lines not sold in the stores, such as home goods, which could be merchandised in existing stores or via separate home units. In addition, there's still tinkering to be done with the men's business, which only has 12 stores. There's also men's wear interspersed in certain misses' stores.

A man of modest stature with a ready smile, Zetcher's public persona seems low-key. But on the job, he's said to be demanding and determined, and fits the profile of a strong operator more so than a merchant prince. He acknowledges being very hands-on. "That's the way I always felt I wanted to be, and everybody here has known through the years what's expected of them."

He's prone to sticking his head in meetings and making secret store visits on the first day of each big semiannual sales event around the country, telling no one his destination, except for whoever books his flight. Visitations, either announced or unannounced, must be part of the routine.

"Some [retailers] visit stores when they find time to do it. I don't do it that way. It's part of the role. You should dedicate time to it."

When the company launched e-commerce, Zetcher had to be the first to click on. "I got up at 5 a.m., put on my robe and bought a couple of items for my wife." He considers the Internet to be a major opportunity for growth.

For good luck, he's made the first purchase at every concept launch, whether it was for kids, accessories, or men's wear, as well as the first Talbots store in the U.K.

Zetcher oversees all aspects of the company's operations, but isn't too high in the hierarchy to make sure that at Christmastime, small gifts like key chains or scarves are sent to the best customers. Between 50,000 and 100,000 gifts go out each year. The company also sends out birthday cards to top customers, with 10 percent discounts.

"As I was growing up in this business, I always had access to watching other ceo's operate their companies," Zetcher said. "I saw all different kinds of approaches. I've seen the hard-fisted ones who managed through fear and wanted people to know that they were clearly the boss, and I've observed others, and that's the path I've wanted to take. I wanted people to be happy where they were working. And that is kind of the culture I believe we've created here. Almost everybody is on a first-name basis. I walk down the hall and say 'hi' to our custodian, Steve, and he'll say 'Hi Arnold, how are you doing?' I just wanted everybody in the company to feel as if it's their company, and this stretches beyond headquarters. When I'm in stores or our officers are out visiting stores, we're not there to tell the store manager what to do or how they should be running it. We're there to ask us what we can do to help. And when I go to a store, I learn every time."

With the stores, Zetcher and his team have created "full-service environments," which is not the norm for big specialty chains, as Arnold Aronson, managing director of retail strategies at Kurt Salmon Associates, pointed out.

"Talbots has done a terrific job preserving the consistency of who they are and understanding the customer, even though there might be some flattening in the last couple of years," Aronson said. "The company has been going up against increasing competition that's trying to emulate what they have been doing for a long time. But for its customers, Talbots delivers a bang for their buck. It's for a lot of people who don't want to stand out, want to feel what they're wearing fits in. It's a good, solid, acceptable middle-American look. There's also a good selling staff in the stores, and a red phone that you can call and get merchandise that isn't in stock and they'll fulfill it for you. You can also look at the catalogue, which has more styles than the store. Talbots delivers on its fashion promise, and it doesn't over deliver on the promise," he said.

"The big question at Talbots is succession planning," said Dana Telsey, ceo and chief research officer for Telsey Advisory Group. "Who is the next Arnold? It's got to be someone who can integrate what's new, modern and current, while enabling the brand to stay true to its roots."

Telsey said one of Talbots hallmarks is its pricing. "Talbots wins big by selling full-price," with a 65-35 ratio to full-price versus markdown selling. More typically, retailers sell close to 50 percent of their goods at markdown.

She noted that Talbots has confronted intensified competition in the last few years, from department stores such as J.C. Penney and Macy's with its private label INC, as well as brands such as Jones Apparel Group and Liz Claiborne. "More retailers have seen opportunities for the 35-year-old plus customer. She's very loyal [to a store she likes] has money to spend, seeks value, fit and quality in the product offering, and is not as trendy," Telsey said.

Talbots does have many loyal customers, she added, noting that more than 45 percent of the company's sales are from its own credit card. She also cited a recent customer survey indicating that 90 percent of Talbots customers will return to the store even though they've not been satisfied this year with some of the offerings.

Early on, Zetcher saw the potential in the 35-and-older customer and for building a brand that capitalized on the demographic. "Twenty years ago, I couldn't [name] another company that was servicing the customer, which through the years has been one of the fastest-growing demographics," Zetcher said. "There might have been some brands out there, but nothing like a specialist or a Talbots for servicing the customer."

The sector has been struggling for several seasons, with Talbots, Ann Taylor and Chico's all experiencing ups and downs, while Gap shut down its fledgling Forth & Towne division this spring.

Zetcher makes no excuses and refuses to blame a bad performance on the weather, though it's a factor at times, he said.

Last year, Talbots' earnings fell to $31.6 million from $93.2 million the year before, while sales rose 23.4 percent to $2.23 billion from $1.81 billion, largely due to the acquisition of J. Jill. The J. Jill brand represented approximately 20 percent of the total volume in 2006, which came to $2.3 billion.

It was an up-and-down year, with the first six months marked by positive comps and a particularly strong September for the Talbots brand. Anticipating a continuing trend, the company increased inventory, but the trend was not sustained, leading to higher-than-normal markdowns. Difficulties continued in the last quarter, with profits down to $5.2 million, from $27.4 million.

"My feeling is that even though the whole sector has struggled, individual situations are taking place in individual companies," Zetcher said. "Chico's issue is different from Talbots which is different from Ann Taylor. If you put it all together, it comes across as if the sector has problems.

"I think this customer is the most coveted, best customer you could have," Zetcher said. "Think about it. When you have a customer who is 35 to 55, she pretty much already knows what she wants and how she wants to be. She's not as trendy. She has the money to buy whatever she wants. So there are really a lot of positives.We've got to make sure we never forget her."

"If Talbots does it right, we should do it better than anybody else. We really should. At a time when most specialty stores in our sector are struggling, we should be doing it better. We haven't done it quite to the level we should."

Zetcher has stuck with his customer and the brand probably longer than any of his peers would have. "I never felt there was a reason to leave. I liked what I was doing. The compensation was reasonable, and yes, I could have gone other places and gotten more, but I was enjoying my work. And I had a group of people that I enjoyed working with every day.

There was another reason. "We've had pretty consistent performance all the way."

One exception was 1997, which Zetcher remembers vividly. "What happened was we had stayed on a steady course and then all of a sudden we were way too young. I remember being in Kansas City in a store during the summer of '97 when a customer came up to me, saying, "How could you do this to me? How could you jilt me? And I said, 'Please. I know we made a big mistake. We're correcting it. Next year is going to be great.' And sure enough, we came right back with the classic styling," and Talbots enjoyed three of its most robust years.

During his pre-Talbots years, Zetcher was ceo of Kohl's Food Stores in Wisconsin and Illinois, and chairman and ceo of Bonwit Teller. He also put in 10 years at Federated Department Stores, now called Macy's Inc., in various financial, administrative and real estate positions, for awhile helping to find new locations for Bloomingdale's. Zetcher served as chairman of the board for the National Retail Federation from 2004 to 2006 and serves on its board of directors. He sits on other boards as well, including Talbots Japan Co. Ltd. and the Boston Downtown Crossing Association.

He was named the NRF's 2002 Gold Medal Winner, the industry's highest honor, and resides in Boston, with his wife, Ellen.

Aside from work, his favorite pastime is horse racing. He owns 40 thoroughbreds, and experiences a similar thrill and sense of anticipation and challenge he finds in retailing. "With both, you start over every season with new hopes and a plan. In retailing, you start each season with new products you hope your customers will love and, as the season ends, you evaluate markdowns to clear your inventories. In horse racing, you bring in new talent, the one- and two-year olds, and hope they develop into winners. And when they reach four, five or six years of age, you may look to sell them." The association extends to the clever way he names his horses. For example, one is called Booming Comps, and another, Classic Attire.

He still owns his first winner - Gabriellina Giof and has bred her three times, and his horse trainer is racing hall of famer Ron McAnnally.

When he's not in Hingham or at the track, Zetcher is on what he calls his "Madonna Farewell Tour." It entails visiting every region and as many stores as possible to say goodbye to as many associates as possible.

"Only she did it six times and I'm doing it once," Zetcher said. "It is a long goodbye."

THROUGH THE YEARS

1947: (1 store) Talbots is founded in Hingham, Mass.

1948: (1 store) Talbots launches a direct-mail catalogue by distributing 3,000 fliers to names obtained from The New Yorker.

1970: (5 stores) The company moves its corporate offices to 175 Beal Street in Hingham, Mass., now known as One Talbots Drive.

1973: (5 stores) General Mills acquires Talbots for $6 million from founders Rudolph and Nancy Talbot.

1980: (13 stores) Talbots expands beyond New England and establishes a toll-free number for catalogue customers.

1988: (137 stores) General Mills sells Talbots to the Tokyo-based Aeon Group.

Talbots opens its Lakeville, Mass., distribution center.

1989: (156 stores) Talbots establishes a second telemarketing facility in Knoxville, Tenn., as well as a development office in New York and an international sourcing operation in Hong Kong.

1990: (192 stores) Talbots opens its first Talbots Kids stores and begins the rollout of Talbots Petites.

1991: (240 stores) Talbots opens its first stores in Canada.

1993: (339 stores) Talbots is listed on the New York Stock Exchange with the ticker symbol "TLB."

1994: (395 stores) Talbots opens its first European store in the London suburb of Kingston Upon Thames.

1995: (460 stores) Talbots introduces the Talbots Babies line and opens five Talbots Accessories & Shoes stores.

1997: (603 stores) Talbots celebrates its 50th anniversary and reaches $1 billion in total company sales.

1998: (638 stores) Talbots launches Talbots Woman, a clothing line for plus-size women in sizes 12W to 24W, through its catalogue and in select retail locations.

The first European flagship opens on Regent Street in London.

1999: (673 stores) Talbots launches talbots.com.

2000: (722 stores) Talbots implements its first 2-for-1 stock split.

2001: (800 stores) Talbots introduces Talbots Woman Petites sizes.

2002: (886 stores) Talbots introduces its first Talbots Mens catalogue.

2003: (977 stores) Talbots opens the first Talbots Men stores and the first separate Talbots Collection store.

2004: (1,049 stores) Talbots opens its 1,000th store in Williamsburg, Va.

2005: (l,083 stores) Talbots introduces Talbots Collection Petites and Talbots Collection shoes.

2006: (1,365 stores) Talbots acquires the J. Jill Group Inc., effective May 3.

2007: (1,365 stores) Talbots celebrates its 60th anniversary.

Caption(s): Arnold B. Zetcher / A fall 2007 look from Talbots. / Talbots' headquarters in Hingham, Mass.