This summary is based on the first quarter fiscal 2007 earnings call conducted by The Talbots Inc. (TLB: chart) on May 23, 2007.

Chairman of the Board, President and Chief Executive Officer: Arnold B. Zetcher

Senior Vice President, Finance, Chief Financial Officer & Treasurer: Edward L. Larsen

President of the J. Jill brand: Philip H. Kowalczyk

Executive Vice President, Chief Merchandising Officer: Harold B. Bosworth

Key Investors Issues

- Including acquisition related costs, earnings per share was 10 cents.
- Quarterly revenue grew 26.6% to $573.6 million.
- The firm paid a cash dividend of 13 cents in the first quarter.

First Quarter Fiscal 2007 Financial Highlights

Net income for the first quarter was $5.2 million or 10 cents per share on a reported basis.

This includes acquisition related costs and adjustments of approximately 13 cents per share. Excluding the acquisition related costs, earnings per diluted share were 23 cents for the combined company. This combined company result includes a first quarter loss for the J. Jill brand of 9 cents per share, and a profit for the Talbots brand of 32 cents per share, compared to 51 cents reported last year for the Talbots only brand.

Total consolidated 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.

The cost of sales, buying and occupancy was 62.7% of net sales versus 60.1% of net sales last year.

This represents a 260 basis point deterioration in gross margin all due to increased markdowns.

Selling, general and administrative expenses in the first quarter were $197 million at 34.3% of net sales versus $136 million and 29.9% of net sales last year in the Talbots only brand.

Of this 440 basis point increase, 190 basis points represent acquisition-related costs and adjustments, and the balance reflects J. Jill SG&A spending at a higher level than Talbots. J. Jill is not in last year’s SG&A numbers as the acquisition was effective on May 3rd, 2006, the beginning of the second quarter.

The firm ended the first quarter with a consolidated operating income of $17 million and earnings per share of 10 cents.

While the bottom-line performance is in line with revised expectations, the firm is well below its first quarter plan. This was due principally to two factors, a shortfall of approximately $41 million versus plan in sales and a resultant effect of much higher than planned markdown inventories taken at deeper discounts.

Net interest expense for the quarter was $9.3 million versus $1.4 million last year for the Talbots only brand.