Talbots in talks with Li & Fung

Hong Kong - Troubled US high street retailer Talbots is reportedly in talks with Hong Kong sourcing agent Li & Fung to mutually explore a potential relationship for the latter to become its primary global sourcing agent.

Talbots said fourth quarter profits fell sharper with sales at stores open at least a year dipping 25%. The retailer has been hurt by slowing consumer spending and rising job losses, and did not give a full-year profit forecast because of "substantial volatility and continued uncertainty in US economic conditions".

The company is reportedly signed a letter of intent with sourcing giants Li & Fung to explore the possibility for the Hong Kong company to become its primary global sourcing agent. The move comes together with Talbots' majority shareholder providing the retailer with a new US$150 million revolving loan.

"Our priority during these times will continue to be addressing those areas within our control, including streamlining our business and tight management of our costs and inventory, while continuing with an acute focus on those measures which improve our cash flow and liquidity," said Trudy F Sullivan, president and CEO in a statement.