Piper Jaffray Reiterates UW Rating On TLB

Piper Jaffray is reiterating its Underweight rating on Talbots Inc. (NYSE: TLB) shares following its FQ4 report in which management guided to a 600 bp decline in gross margin for FQ1.

“Continued top-line weakness is largely attributable to traffic--this is a systemic problem for Talbots given its poorly positioned real estate portfolio in our view,” Piper Jaffray writes.

“We are encouraged by management's plans to close 90 to 100 stores in the next two years (an acceleration from the prior plan), however we are concerned that margin gains stemming from the 70 planned remodels this year may be disappointing and will likely not have much impact on FY11 results.”

Talbots currently trades at $5.93.