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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   ----------

                                    FORM 10-K

(MARK ONE)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED February 1, 1997
                          ----------------

                                       OR
[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                 TO                
                               ----------------  ----------------

                         COMMISSION FILE NUMBER 1-12552
                                                -------

                                THE TALBOTS, INC.
             ------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


              Delaware                                  41-1111318
              --------                                  ----------
(STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)


175 Beal Street, Hingham, Massachusetts                   02043
---------------------------------------                   -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                (ZIP CODE)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (617)749-7600
                                                   -------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
         TITLE OF EACH CLASS          NAME OF EACH EXCHANGE ON WHICH REGISTERED
         -------------------          -----------------------------------------
         Common Stock                 New York Stock Exchange
         $0.01 Par Value


SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  None.

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS TO BE
FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE
PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO THE FILING REQUIREMENTS FOR THE
PAST 90 DAYS. YES  X  NO
                  ---    ---


INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]

THE APPROXIMATE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES (FOR THIS PURPOSE, DEEMED TO REFER TO ALL PERSONS AND ENTITIES
OTHER THAN EXECUTIVE OFFICERS, DIRECTORS AND 10% OR MORE SHAREHOLDERS) BASED ON
THE CLOSING SALE PRICE ON THE NEW YORK STOCK EXCHANGE COMPOSITE TAPE ON APRIL 3,
1997 WAS APPROXIMATELY $348 MILLION.

NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AS OF APRIL 3,
1997: 32,917,757

                      DOCUMENTS INCORPORATED BY REFERENCE:

PORTIONS OF THE REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR
ENDED FEBRUARY 1, 1997 ARE INCORPORATED BY REFERENCE INTO PART II, AND PORTIONS
OF THE REGISTRANT'S PROXY STATEMENT FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS
ARE INCORPORATED BY REFERENCE INTO PART III.




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                                     PART I


ITEM 1. BUSINESS.

GENERAL

     The Talbots, Inc., a Delaware corporation (together with its wholly owned
subsidiaries, "Talbots" or the "Company"), is a leading national specialty
retailer and cataloger of women's classic apparel, accessories and shoes. Over
the past eight years, the Company has implemented an aggressive store expansion
program, with the number of stores increasing from 137 at the end of 1988 to 535
at the end of 1996. During 1996, Talbots issued 26 separate catalogs with a
combined circulation of approximately 50 million. Total net sales were
approximately $1,018.8 million in 1996, of which retail store sales were
approximately $839.0 million and catalog sales were approximately $179.8
million.

     To conform with other industry retailers, Talbots adopted the National
Retail Federation's fiscal calendar during 1995, which in fiscal 1995 had 53
weeks. Where a reference is made in this Part I to a particular year or years,
it is a reference to Talbots 52-week or 53-week fiscal year. For example, "1996"
refers to the 52-week fiscal year ended February 1, 1997, "1995" refers to the
53-week fiscal year ended February 3, 1996, and "1994" refers to the 52-week
fiscal year ended January 28, 1995. Since Talbots fiscal 1996 was a 52-week year
and fiscal 1995 was a 53-week year, comparable store sales are reported in this
Annual Report on a 52-week comparative basis.

     Talbots stores and catalogs offer a distinctive collection of classic
sportswear, casual wear, dresses, coats, sweaters, accessories and shoes,
consisting primarily of Talbots own private label merchandise in misses and
petites sizes. Talbots Kids stores and catalogs offer an assortment of high
quality classic clothing and accessories for infants, toddlers, boys and girls.
Talbots merchandising strategy focuses on achieving a "classic look", which
emphasizes timeless styles. Talbots stores and catalogs offer a variety of key
basic and fashion items and a complementary assortment of accessories and shoes
which enable customers to assemble complete outfits. The consistency in color,
fabric and fit of Talbots merchandise allows a customer to create wardrobes
across seasons and years. The Company believes that a majority of its customers
are college-educated and employed, primarily in professional and managerial
occupations, and are attracted to Talbots by its focused merchandising strategy,
personalized customer service and continual flow of high quality, reasonably
priced classic merchandise.


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     Talbots has established a market niche as a brand in women's classic
apparel, accessories and shoes. In 1996, approximately 98% of the Company's
merchandise consisted of styles that were sold exclusively under the Talbots
label. Most of this merchandise is manufactured to the specifications of the
Company's technical designers and product developers, enabling Talbots to offer
consistently high quality merchandise that the Company believes differentiates
Talbots from its competitors.

     The Company operates its stores and catalogs as an integrated business and
provides the same personalized service to its customers regardless of whether
merchandise is purchased through its stores or catalogs. The Company believes
that the synergy between Talbots stores and catalogs offers an important
convenience to its customers and a competitive advantage to the Company in
identifying new store sites and testing new business concepts.

     The first Talbots store was opened in 1947 in Hingham, Massachusetts by
Rudolph and Nancy Talbot. The first Talbots catalog was issued the following
year with a circulation of approximately 3,000. Additional stores were opened
beginning in 1955, and there was a total of five Talbots stores by 1973, at
which time the Company was acquired by General Mills, Inc. Talbots continued to
expand and grew to 126 stores by June 1988. In June 1988, JUSCO (U.S.A.), Inc.
("JUSCO USA"), a Delaware corporation, acquired Talbots (the "Acquisition").
JUSCO USA is a wholly owned subsidiary of JUSCO Co., Ltd. ("JUSCO"), a Japanese
corporation. On November 18, 1993, the Company effected an initial public
offering of its common stock (the "Offering"), issuing approximately 12.6
million shares of common stock. Subsequent to the Offering, JUSCO USA continues
to own approximately 63.4% of the outstanding common stock of the Company.

     The Company grew significantly after the Acquisition by adding stores and
developing new complementary business concepts that capitalized on the strength
of the Talbots name and its loyal customer base. By February 1, 1997, the number
of stores increased to 535, in 44 states, the District of Columbia, Canada and
the United Kingdom. This number included 351 Talbots Misses stores (including 19
Misses stores in Canada and five Misses stores in the United Kingdom), 100
Talbots Petites stores (including one Petites store in Canada), 14 Talbots
Accessories & Shoes stores, 55 Talbots Kids stores, four Talbots Intimates
stores, and 11 Talbots Outlet stores. Of the Company's $839.0 million in total
retail store sales for fiscal 1996, Talbots Misses stores accounted for $633.2
million; Talbots Petites, $106.8 million; Talbots Accessories & Shoes, $7.9
million; and Talbots Kids, $43.5 million. The remaining $47.6 million was
generated from Talbots Outlet stores and test concepts.

     Talbots catalog business also has undergone changes. The circulation of
catalogs has been reduced by 36.4% from 78.1 million catalogs in 1989 to 49.7
million catalogs in 1996. This circulation reduction has been an integral part
of a strategy to better focus the distribution of catalogs to proven customers
and, more recently, to offset increased paper costs in the production of the
catalogs. From 1989 to 1996, sales per catalog has increased from $1.88 to
$3.62.


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STRATEGY

     Talbots has established a market niche as a brand in women's classic
apparel, accessories and shoes. The Company's strategy is to maintain its strong
competitive position in private label classic apparel and to capitalize on the
strength of the Talbots name and loyal customer base through geographic
expansion and development of new business concepts. The key elements of the
Company's strategy are to: (1) maintain its strong competitive position as a
full-price retailer of private label classic apparel offering personalized
customer service, (2) continue to capitalize on its complementary store and
catalog operations, (3) continue its store expansion program by opening new
stores, and (4) capitalize on the strength of its brand name through the
development of new business concepts, such as Talbots Kids, Talbots Babies and
Talbots Accessories & Shoes.

     MARKET NICHE IN CLASSIC APPAREL. Talbots stores and catalogs offer a
distinctive collection of sportswear, casual wear, dresses, coats, sweaters,
accessories and shoes, consisting primarily of the Company's own private label
merchandise in misses and petites sizes. Talbots offers a variety of key basic
and fashion items and a complementary assortment of accessories and shoes to
enable customers to assemble complete outfits. An important aspect of the
Company's marketing strategy is dressing the customer from "head-to-toe" to
create Talbots signature "classic look". The Company believes that consistently
emphasizing timeless styles helps to create a loyal customer base and reduces
the risk that its apparel, shoes and accessories will be affected by sudden
changes in fashion trends.

     TALBOTS PRIVATE LABEL. In 1988, the Company implemented a strategy to
increase the percentage of its merchandise that is sold exclusively under the
Talbots label. The clothing assortment under the Talbots private label grew from
approximately 25% in 1987 to approximately 98% in 1996. Sales of private label
merchandise generally provide the Company with a higher gross margin than it
believes would generally be obtained on other merchandise and establishes
Talbots identity as a brand of women's classic apparel. The Company's private
label merchandise features the building blocks of a classic wardrobe, including
key basic items such as the classic blazer, white blouse and turtleneck sweater,
as well as complementary fresh fashion items and accessories to create Talbots
signature "classic look".

     The Company believes that the quality and value of its classic merchandise
and its commitment to personalized customer service are key factors to its
success. Most of Talbots merchandise is manufactured to the specifications of
the Company's technical designers and product developers, enabling Talbots to
offer consistently high quality merchandise that the Company believes
differentiates Talbots from its competitors. The Company continually monitors
the production of its domestic and overseas manufacturers to assure that all
apparel is of consistent fit and high quality.

     FULL-PRICE RETAILER. The Company positions itself as a full-price retailer.
Talbots holds only four sale events a year in all of its stores other than its
Outlet stores, consisting of two end-of-season clearance sales and two
mid-season sales, each in conjunction with catalog sales events.

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No other promotional sale events are held. The Company believes that its
strategy of limiting sales to four events a year projects Talbots as a high
quality, reasonably priced brand that may be purchased at regular price. With
this policy, the Company believes that its customers are satisfied that the
regular retail price is the true price of the merchandise which will not be
marked down periodically during the selling season.

     COMPLEMENTARY STORE AND CATALOG OPERATIONS. The Company's strategy is to
operate its stores and catalogs as an integrated business and to provide the
same personalized service to its customers regardless of whether merchandise is
purchased through its stores or catalogs. The Company believes that the synergy
between Talbots stores and catalogs offers an important convenience to its
customers and a competitive advantage to the Company in identifying new store
sites and testing new business concepts.

     Talbots catalogs provide customers with a broader selection of merchandise,
sizes and colors than its stores. In each of its stores, Talbots offers a "Red
Line" phone which connects the store customer directly to a catalog
telemarketing sales associate. This service can be used by store customers to
order a particular size or color of an item that is a catalog-only item or that
is sold out in the store. Reduced shipping and handling charges are available to
customers who use the "Red Line" phone service. In addition to providing
customers the convenience of ordering Talbots merchandise, the Company generally
uses its catalogs to communicate its classic image, to provide customers with
fashion guidance in coordinating outfits and to generate store traffic. Catalog
merchandise can be easily returned or exchanged at any Talbots store as well as
returned to the Company by mail.

     The Company believes that its catalog operations provide Talbots with a
competitive advantage. The customer database compiled through Talbots catalog
operations provides important demographic information and serves as an integral
part of the Company's expansion strategy by helping to identify markets with the
potential to support a new store. The Company also believes that its strategy of
using its catalogs to test new business concepts such as Talbots Kids and
Talbots Accessories & Shoes before buying merchandise for and building new
stores helps lessen the risk of these new ventures.

     EXPANSION. The Company has followed an expansion program that is designed
to reach new and existing customers through the opening of new stores. The
Company selects store locations that it believes are convenient for its
customers and consistent with its image. In addition to opening new Talbots
stores in the United States during fiscal 1996, the Company opened three stores
in Canada, and two stores in the United Kingdom. The Company is exploring
further expansion opportunities in international markets.


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     INTRODUCTION OF NEW BUSINESS CONCEPTS. The Company is currently introducing
new business concepts that complement its core business of women's classic
apparel in misses and petites sizes. The Company has used its catalog as a
vehicle to test new business concepts and merchandise before sending such
merchandise to its stores.

     In 1984, Talbots began offering merchandise in petites sizes in its
catalogs, and in 1985, the Company opened its first Talbots Petites store.
During 1989, Talbots stores began to carry a selection of Talbots Petites
merchandise, and the Company opened three additional Talbots Petites stores in
1990 as the beginning of its strategy to expand Talbots Petites business. At
February 1, 1997, 100 Talbots Petites stores were open, and virtually every item
of womens apparel in the catalog was offered in both misses and petites sizes.

     In 1989, the Company presented Talbots Kids merchandise in a separate
catalog dedicated to apparel for boys and girls. Based on successful customer
response to the catalog merchandise, the first Talbots Kids store opened in 1990
and by the end of 1996, 55 Talbots Kids stores were open. The Company will
continue to position Talbots Kids as a brand that offers a complete assortment
of high quality classic clothing and accessories for boys and girls.

     Following the successful introduction of Talbots Kids, the Company
implemented a similar strategy to introduce Talbots Intimates, which offers
classic sleepwear, daywear (principally underwear) and loungewear. Talbots
initially offered only a limited selection of sleepwear and robes in stores and
catalogs during the holiday seasons and, beginning in 1991, offered a larger
assortment of intimate apparel in selected catalogs. The introduction of
intimate apparel strengthened Talbots wardrobing concept of dressing its
customers from "head-to-toe". At February 1, 1997, four Talbots Intimates stores
were open. Having operated these stores in a test mode for several years, the
Company has now decided that its most appropriate distribution channel for
selling intimate apparel is as a department within a Misses store, rather than
as a separate store. Therefore, the Company is implementing plans in 1997 to
introduce smaller collections of intimate apparel in approximately 40 Misses
stores. Furthermore, a portion of the present Intimates stores are being
converted into new Accessories & Shoes stores, with the remaining space being
integrated into adjacent Talbots Misses stores as intimate apparel departments.

     During 1994, Talbots introduced a new test concept, Talbots Accessories and
Shoes, through the distribution of two catalogs devoted to classic accessories
and shoes. A limited collection of the merchandise was previously offered, and
continues to be offered, in each Misses catalog and in selected stores. The
Company opened five Talbots Accessories and Shoes stores in September 1995.
Based upon the positive response to these stores, the Company opened nine
additional Talbots Accessories & Shoes stores in 1996. This concept further
develops the Company's ability to present a "head-to-toe" wardrobe to its
customer.

     Also during 1995, Talbots expanded the Talbots Kids merchandise by offering
an assortment for infants and toddlers, Talbots Babies. In addition to
presenting the merchandise in

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the catalog, Talbots introduced the new line in two new and two expanded Talbots
Kids stores. As a result of the performance of this new merchandise line in
1995, the Company expanded eight existing Talbots Kids stores to accommodate
Talbots Babies and included Talbots Babies in five of the six new Talbots Kids
stores opened during 1996. The Company intends to include Talbots Babies in all
new Talbots Kids stores going forward and is implementing plans in 1997 to add a
small assortment of Talbots Babies merchandise into approximately 19 existing
Talbots Kids stores. By the end of 1997, Talbots Babies is expected to be in
about two-thirds of all Talbots Kids stores.

MERCHANDISING

     The Company's merchandising strategy focuses on achieving a "classic look,"
which emphasizes timeless styles. Talbots stores and catalogs offer a
distinctive collection of classic sportswear, casual wear, dresses, coats,
sweaters, accessories and shoes, consisting primarily of private label
merchandise made exclusively for Talbots in misses and petites sizes. Talbots
stores and catalogs offer a variety of key basic and fashion items and a
complementary assortment of accessories and shoes which enable customers to
assemble complete outfits. Sales associates are trained to assist customers in
merchandise selection and wardrobe coordination, helping them achieve the
Talbots look from "head-to-toe". The consistency in color, fabric and fit of
Talbots merchandise also allows a customer to create wardrobes across seasons
and years.

EXPANSION

     An important aspect of the Company's business strategy has been an
expansion program designed to reach new and existing customers through the
opening of new stores. The Company has grown significantly over the past ten
years, with the number of stores increasing from 84 at the end of 1986 to 535
at the end of 1996. During that time, store net sales increased from
approximately $150.0 million in 1986 to approximately $839.0 million in 1996.
From the end of 1995 to the end of 1996, the number of Talbots stores increased
from 460 to 535.

     The Company selects store locations which are convenient for its customers
and consistent with its image. Store sites are selected by the Company's real
estate department and approved by the Company's real estate committee on the
basis of various factors.

     The Company generally adds additional locations in major cities, certain
suburbs and smaller markets, each where Talbots catalog has been successful. The
customer database compiled through Talbots catalog operations provides important
demographic information about potential store markets. Although the addition of
stores in areas where the catalog has been successful has resulted in slightly
lower catalog sales in such areas, such lower catalog sales have been more than
offset by the significantly higher sales generated in these areas by the opening
of new stores. The Company continues to pursue opportunities in smaller markets
for the opening of smaller sized Misses stores. The Company believes that by
opening stores in smaller markets, it can grow while enjoying lower rental,
construction and operating costs.

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     The Company currently anticipates opening approximately 70 new stores
(including Misses, Petites, Kids & Babies, Accessories & Shoes and Outlet
stores) in 1997. The Company's ability to continue to expand will be dependent
upon general economic and business conditions affecting consumer confidence and
spending, the availability of desirable locations and the ability to negotiate
acceptable lease terms for new locations. The ability of the Company to open
additional Talbots Petites, Talbots Kids & Babies, Talbots Accessories & Shoes
and Talbots Outlet stores (and the mix of such openings) will be dependent upon
similar factors as well as the performance of Talbots existing stores at such
locations and the availability of suitable space. The Company will also consider
opening such stores in established Talbots markets where a Misses store is not
located, thereby broadening the growth potential for each concept. In addition,
the Company's expansion plans concerning its test concepts also will be
dependent upon the performance of the collections of such merchandise offered in
Misses stores and catalogs.

STORES

     At February 1, 1997, the Company operated 535 stores in 44 states, the
District of Columbia, Canada and the United Kingdom. Talbots stores (other than
the eleven Talbots Outlet stores) are located in a wide variety of retail
settings, including malls, specialty centers, village locations, freestanding
buildings and urban locations.

     Misses stores generally range in size from 3,500 to 6,500 gross square
feet, with a typical store averaging approximately 4,900 gross square feet.
Talbots Petites stores generally measure 2,400 gross square feet, and Talbots
Kids stores measure approximately 2,500 gross square feet, with those including
Talbots Babies measuring approximately 3,500 gross square feet. Flagship stores
are Misses stores which are utilized to generate greater awareness of Talbots
merchandise in major metropolitan locations, including Boston, New York City,
Washington D.C., Chicago, San Francisco and Toronto, and generally are larger
than the average Misses store. Approximately 75% of the floor area of all
Talbots stores is devoted to selling space (including fitting rooms), with the
balance allocated to stockroom and other non-selling space.

     In certain markets, the Company has created Talbots "superstores" by
placing two or more other Talbots concepts in close proximity to a Misses store.
Together, these stores feature at least three of Talbots business
concepts--Misses, Petites, Kids, Intimates and/or Accessories & Shoes--in order
to create a one-stop shopping environment. The Company operates 46
"superstores," including eight four-concept "superstores" and two five-concept
"superstores."

     The Company utilizes Talbots Outlet stores, which are separate from its
retail stores, to provide for the controlled and effective clearance of store
and catalog merchandise remaining from each sale event. The Company uses Talbots
Outlet stores only for the sale of past season and "as is" merchandise. The
Company does not purchase merchandise specifically for Talbots Outlet stores.
Merchandise in Talbots Outlet stores is sold at significant markdowns from
original retail prices. At February 1, 1997, the Company operated eleven Talbots
Outlet stores.


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     Talbots stores are distinguished by a signature red door created for each
of the business concepts. Each interior is designed to have a gracious and
comfortable residential feel. This interior design theme is consistently used in
all Talbots Misses and Talbots Petites stores to promote familiarity, ease of
shopping and cost savings in the design and construction of new stores. Talbots
Kids, and Talbots Accessories & Shoes also have their respective signature red
doors and interior design themes. Talbots Kids stores are designed to create a
light atmosphere with colorful medallions, confetti flecked carpeting and
striped wall covering. Talbots Accessories & Shoes are designed to reflect the
atmosphere of a traditional carriage house, utilizing green and warm grey tones
to complement wood furniture and finishes. Management provides guidelines for
merchandise display to the stores throughout the year.

TALBOTS CATALOG

     Since 1948, the Company has used its catalog to offer potential and
existing customers convenience in ordering Talbots merchandise. In 1996, the
Company distributed 26 separate catalogs with a combined circulation of
approximately 49.7 million, including catalogs sent to stores for display and
general distribution. During 1996, catalog sales represented approximately 17.6%
of total Company sales. Catalog circulation has included: base catalogs offering
the broadest assortment of Talbots merchandise; specialty catalogs such as the
Classics That Work series featuring career clothing; Talbots Kids catalogs;
Talbots Intimates catalogs; Talbots Accessories & Shoes catalogs; and sale
catalogs. In addition to providing customers convenience in ordering Talbots
merchandise, the Company generally uses its catalogs to communicate its classic
image, to provide customers with fashion guidance in coordinating outfits and to
generate store traffic. This past fall Talbots introduced Canada and U.K.
versions of several domestic catalogs, with prices listed in local currencies
and special toll-free numbers to call. The Company hopes that over time, the
international catalogs will provide the same synergy with its international
stores that the domestic market experiences, as well as reach new customers.
Furthermore, in conjunction with the Company's store strategy to incorporate
intimate apparel into its Misses and Petites assortment, the Company is
implementing plans in 1997 to add more intimate apparel pages to its base
catalogs, and to discontinue the distribution of separate catalogs dedicated to
intimate apparel.

     Beginning in 1989, the Company implemented a program to improve the
productivity of its catalog operations by broadening its merchandise assortment
and adjusting its catalog circulation to better target established and
prospective buyers, which reduced catalog mailings by 36.4% from 1989 to 1996,
increased sales per catalog by 92.6% during the same period and provided savings
on production and mailing costs. The Company utilizes computer applications
which employ mathematical models to improve the efficiency of its catalog
mailings through refinement of its customer list. A principal factor in
improving customer response has been the Company's development of its own list
of active customers. The Company routinely updates and refines this list prior
to individual catalog mailings by monitoring customer interest as reflected in
criteria such as the frequency and dollar amount of purchases as well as the
last date of purchase.

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     The Company attempts to make catalog shopping as convenient as possible.
The Company maintains a toll-free number, accessible 24 hours a day, seven days
a week (except Christmas Day), to accept requests for catalogs and to take
customer orders. In response to our catalog business from international
customers, toll-free numbers were established in the Company's seven top
performing countries and a foreign language interpreter service for telephone
orders is provided. The Company maintains telemarketing centers in Knoxville,
Tennessee and Hingham, Massachusetts which, linked by computer and telephone,
are designed to provide uninterrupted service to customers. Telephone calls are
answered by knowledgeable sales associates located at the telemarketing centers
who utilize on-line computer terminals to enter customer orders and to retrieve
information about merchandise and its availability. These sales associates also
suggest and help to select merchandise and can provide detailed information
regarding size, color, fit and other merchandise features. In both the Hingham
and Knoxville telemarketing centers, sales associates are able to refer to
current catalog items in a sample store, thereby allowing them to view
merchandise as they assist customers.

     The Company employs state-of-the-art technology to process orders. Sales
associates enter orders on-line into a computerized inventory control system
which systematically updates Talbots customer list and permits the Company to
measure the response to individual merchandise and catalog mailings. Sales and
inventory information is available to the Company's Hingham-based buying staff
the next day. The Company has achieved efficiencies in order entry and
fulfillment which permit the shipment of most orders the following day.

PRIVATE LABEL MERCHANDISE DESIGN AND PURCHASING

     Talbots private label merchandise is designed through the coordinated
efforts of the Company's merchandising and manufacturing team, which consists of
the New York-based Talbots product development office, the technical testing and
design staff, the buying staff, the production planning staff and Talbots
International, a Hong Kong-based product sourcing office. Styles for Talbots
private label merchandise are developed based upon prior years' sales history
and current fashion trends for each of the six merchandising periods (winter,
resort, spring, summer, transition and fall).

     The New York-based Talbots product development office oversees the
conceptualization of Talbots product. This initial product determination
concerns styling, color, and fabrication recommendations. The style
recommendations include both the evolution of the traditional classic styles as
well as the development of new fashion pieces used throughout the merchandise
assortment. This process usually occurs approximately nine months before the
expected in-house delivery date of the merchandise.

     The Company's Hingham-based buying staff is responsible for the
quantification of specific merchandise and departmental needs and plans. These
plans are used to place specific item orders on styles developed in teamwork
with the product development office and with the various merchandise vendors.

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     In conjunction with the merchandise developed by the product managers and
the buying organization, the Company's Hingham-based technical testing and
design staff works to determine the technical specifications of all
private-label merchandise. In addition to preparing the initial specifications,
this group also reviews the first merchandise sample and the production samples
of each item to ensure that specifications and quality standards are met.

     In 1996, Talbots purchased approximately 44% of its merchandise directly
from off-shore manufacturers. During the year, the Company's Hong Kong office
accounted for approximately 70% of Talbots total direct off-shore sourcing, with
the remaining 30% being handled through various agents. The remaining 56% of
Talbots merchandise is sourced through domestic-based resources.

     The Company typically transacts business on an order-by-order basis and
does not maintain any long-term or exclusive commitments or arrangements to
purchase from any vendor. The Company believes that it has good relationships
with its vendors and that, as the number of Talbots stores increases, there will
be adequate sources to produce a sufficient supply of quality goods in a timely
manner and on satisfactory economic terms. The Company does business with most
of its vendors in United States currency and has not experienced any material
difficulties as a result of any foreign political, economic or social
instabilities.

     Approximately 30% of Talbots merchandise is currently sourced through Hong
Kong. Hong Kong is presently a British Crown Colony, but sovereignty over Hong
Kong will be transferred effective July 1, 1997 from the United Kingdom to the
People's Republic of China. The agreement provides that the social and economic
systems in Hong Kong will remain a matter of the people of Hong Kong's choice
for 50 years after June 30, 1997. The Company is considering alternative methods
of sourcing in the Far East should the business climate in Hong Kong change.

     In order to diversify the Company's Far East sourcing operations,
additional overseas sourcing offices have been established in Jakarta, Indonesia
and Bangkok, Thailand. Under the terms of an agreement between the Company and
Eralda Industries ("Eralda"), a long time supplier of the Company, Eralda will
serve as the Company's exclusive agent and has established these offices to
serve the Company in this capacity.

     In addition to the Company's office in Hong Kong, which deals with local
manufacturers, and the sourcing arrangement with Eralda, Talbots utilizes agents
in Japan, Korea, Singapore, Israel, Italy, Portugal, and England plus domestic
resources to source its merchandise. The Company analyzes its overall
distribution of manufacturing to assure that no one company or country is
responsible for a disproportionate amount of Talbots merchandise. Directly
sourced merchandise is currently manufactured to its specifications by
independent foreign factories, located primarily in Hong Kong, other Asian
countries such as Macao, China, Thailand, Korea and Indonesia, and Europe.


                                       11

<PAGE>   12



     The Company's domestic vendors include those who either manufacture their
own merchandise or supply merchandise manufactured by others, as well as vendors
that are both manufacturers and suppliers. In 1996, the David Brooks, Robert
Terry, Robert Scott and Smart Shirt divisions of The Kellwood Company accounted
for an aggregate of approximately 9% of the total merchandise purchased by
Talbots. Most of Talbots Hong Kong and other foreign vendors manufacture their
own merchandise. The Company believes that, consistent with the retail apparel
industry as a whole, many of its domestic vendors import part of their
merchandise from abroad.

INVENTORY CONTROL AND MERCHANDISE DISTRIBUTION

     The Company uses a centralized distribution system, under which all
merchandise is received, processed and distributed through Talbots catalog and
store distribution center in Lakeville, Massachusetts. Merchandise received at
the distribution center is promptly inspected, assigned to individual stores,
packed for delivery and shipped to the stores. Talbots ships merchandise to its
stores virtually every business day, with each store generally receiving
merchandise twice a week. Generally, inventory turns over approximately two and
one half times annually. The Company believes that its strong store and catalog
synergy coupled with its central distribution system allows it to move
merchandise between the stores and catalog to better take advantage of sales
trends.

     In June, 1995, the Company completed a $7.0 million expansion of its
distribution center in Lakeville, Massachusetts, by adding an additional 124,260
square feet to support its expansion plans. A 25,400 square foot mezzanine level
was added in 1996 to further support the Company's growth.

MANAGEMENT INFORMATION SYSTEMS

     Talbots management information systems and electronic data processing
systems are located at the Company's Systems Center in Tampa, Florida. These
systems consist of a full range of retail, financial and merchandising systems,
including credit, inventory distribution and control, sales reporting, accounts
payable, merchandise reporting and distribution. In accordance with the
Company's strategy to update its management information systems, all systems,
both hardware and software, have either been installed or modified to be in line
with the current and planned domestic and international needs of Talbots.

     All Talbots stores have point-of-sale terminals that transmit information
daily on sales by item, color and size at each store. Talbots stores are
equipped with bar code scanning programs for the recording of store inventories,
price changes, receipts and transfers. The Company evaluates this information,
together with weekly reports on merchandise statistics, prior to making
merchandising decisions regarding reorders of fast-selling items and allocation
of merchandise.

     Also, sales associates can locate merchandise no longer available in their
store at any Talbots location with a single phone call, 24 hours a day, seven
days a week.

                                       12

<PAGE>   13



SEASONALITY

     Historically, catalog sales had been higher during the first and third
quarters due to the timing of catalog circulation and the placement of customer
orders early in the season. However, as shopping patterns have changed and
customers are buying closer to time of need, the difference in catalog sales
between the third and fourth quarters has diminished. Retail store sales
typically peak in the fourth quarter due to the holiday gift season and the
impact of new stores opened during the year. From a total Company perspective,
the highest sales are in the fourth quarter.

COMPETITION

     The women's retail apparel industry is highly competitive. The Company
believes that the principal bases upon which it competes are quality, value and
service in offering classic apparel to build "head-to-toe" wardrobes through
both stores and catalogs.

     Talbots competes with certain departments of national specialty department
stores such as Lord & Taylor, Saks Fifth Avenue and Nordstrom as well as strong
regional department store chains such as Macy's, Marshall Field and Dillard's.
The Company believes that it competes with these department stores by offering a
focused merchandise selection, personalized service and convenience. Talbots
also competes with other specialty retailers such as The Limited, Ann Taylor,
Eddie Bauer and The Gap, and with catalog companies such as L.L. Bean, Lands'
End and Spiegel. The Company believes that its focused merchandise selection in
classic apparel, consistent private label merchandise, superior customer service
and store site selection resulting from the synergy between its stores and
catalog operations, and the availability of its merchandise in extended misses
sizes and petites sizes distinguish it from other specialty retailers.

EMPLOYEES

     At February 1, 1997, Talbots had approximately 7,200 employees, of whom
approximately 2,000 were full-time salaried employees, approximately 1,200 were
full-time hourly employees and approximately 4,000 were part-time hourly
employees. The Company believes that its relationship with its employees is
good.


                                       13

<PAGE>   14



EXECUTIVE AND OTHER OFFICERS OF THE COMPANY

<TABLE>
     The following table sets forth certain information regarding the executive
and other officers of the Company as of February 1, 1997:

<CAPTION>
Name                          Age      Position
----                          ---      --------

<S>                           <C>      <C>
Arnold B. Zetcher             56       President and Chief Executive Officer
Clark J. Hinkley              55       Executive Vice President and Chief Operating Officer
J. Bruce Ash                  48       Senior Vice President, Management Information
                                          Systems
Paul V. Kastner               45       Senior Vice President, International and Strategic
                                          Planning
Edward L. Larsen              52       Senior Vice President, Finance, Chief Financial
                                          Officer and Treasurer
Michele M. Mandell            49       Senior Vice President, Stores
Richard T. O'Connell, Jr.     46       Senior Vice President, Legal and Real Estate, and
                                          Secretary
Mary R. Pasciucco             42       Senior Vice President, Catalog Development and
                                          Advertising
Ronald L. Ramseyer            54       Senior Vice President, Direct Marketing
Bruce C. Soderholm            54       Senior Vice President, Operations
Stuart M. Stolper             57       Senior Vice President, Human Resources
Jacqueline M. Corso           43       Vice President, General Merchandise Manager
Sandy F. Katz                 48       Vice President, Audit and Control
Judy O'Keefe                  53       Vice President, Merchandise Administration
Bruce Lee Prescott            40       Vice President, Customer Service and Telemarketing
Steven J. Siegler             44       Vice President, Product Development
Kathleen Ann Staab            49       Vice President, General Merchandise Manager
Lucy Main Tweet               44       Vice President, Manufacturing
John L. Florio                41       Director of Legal Services and Assistant Secretary
</TABLE>

     Mr. Zetcher joined Talbots as President in 1987. He has been President and
Chief Executive Officer and a member of the Board of Directors since 1988. Mr.
Zetcher was Chairman and Chief Executive Officer of John Breuner Company, a home
furnishings division of BATUS in San Francisco, California, and prior to that,
Chairman and Chief Executive Officer of Kohl's Food Stores, another BATUS
division, in Wisconsin and Illinois. Mr. Zetcher also served as Chairman and
Chief Executive Officer of Bonwit Teller in New York and served in various
capacities during his ten years with Federated Department Stores.

     Mr. Hinkley has been Executive Vice President and a member of the Board of
Directors since 1988 and Executive Vice President and Chief Operating Officer
since 1993. He joined Talbots in 1987 as Vice President, General Merchandise
Manager. From 1984 until 1987, he was Vice President, General Merchandise
Manager, Women's Apparel at Dayton Hudson Department Store in Minneapolis,
Minnesota. From 1979 to 1984, he was Vice President, General

                                       14

<PAGE>   15



Merchandise Manager, Women's Apparel and Accessories at J.L. Hudson in Detroit,
Michigan and served in various other capacities at J.L. Hudson between 1963 and
1979.

     Mr. Ash has been Senior Vice President, MIS since 1988. He joined Talbots
in 1988 as Vice President, MIS. Prior to that time, he was Vice President, MIS
at Filene's Department Stores in Boston.

     Mr. Kastner joined Talbots in 1988 as Director, Business Planning and
Analysis and became Vice President, New Business Ventures and Strategic Planning
in 1989. In 1994, Mr. Kastner was promoted to the position of Senior Vice
President, International and Strategic Planning. Prior to joining Talbots, he
was Director of Research and Merchandise Information with John Breuner Company
in California.

     Mr. Larsen became Senior Vice President, Finance, Chief Financial Officer
and Treasurer of Talbots in 1991. From 1989 to 1991, Mr. Larsen was Vice
President and Chief Financial Officer of Lillian Vernon Corporation. From 1977
to 1988, he held various positions with General Mills, Inc., including from 1985
to 1988 the position of Vice President and Group Controller of the Specialty
Retailing Group at General Mills, Inc.

     Ms. Mandell has been Senior Vice President, Stores since 1992. She joined
Talbots in 1983 as Store Manager, became District Manager in 1984 and served as
Regional Director from 1985 until 1992. From 1971 to 1983 she held management
and buying positions for Price's of Oakland in Pittsburgh, Pennsylvania and A.E.
Troutman Co. in Indiana, Pennsylvania.

     Mr. O'Connell, who joined Talbots in 1988 as Vice President, Legal and Real
Estate and Secretary, became Senior Vice President, Legal and Real Estate and
Secretary in 1989. Prior to joining Talbots, he served as Vice President, Group
Counsel of the Specialty Retailing Group at General Mills, Inc.

     Ms. Pasciucco has been Senior Vice President, Catalog Development and
Advertising since 1989. From 1985 until 1989, she served as Vice President,
Catalog Development, and from 1982 until 1985, she served as Director, Catalog
Development.

     Mr. Ramseyer joined Talbots in 1991 as Senior Vice President, Direct
Marketing. From 1989 to 1991, he was a consultant to clients in the catalog
business. He was the National Catalog Advertising Manager for Sears, Roebuck &
Co. from 1981 until 1989.

     Mr. Soderholm has been Senior Vice President, Operations since 1989. He
joined Talbots in 1976 as Director of Operations and served as Vice President,
Operations from 1980 to 1989.


                                       15

<PAGE>   16



     Mr. Stolper joined Talbots in 1989 as Vice President, Human Resources and
assumed the position of Senior Vice President, Human Resources later that year.
From 1988 to 1989, he served as Vice President, Administration at JUSCO USA.
Prior to that time, he was Vice President, Human Resources of the Specialty
Retailing Group at General Mills, Inc.

     Ms. Corso joined Talbots in 1991 as Vice President, General Merchandise
Manager. From 1990 to 1991, Ms. Corso was Divisional Merchandise Manager at
Montgomery Ward. From 1986 to 1989, she served as Divisional Vice
President/Divisional Merchandise Manager at May Department Stores.

     Mr. Katz joined Talbots in 1989 as Vice President, Audit and Control. From
1988 to 1989, Mr. Katz was President of SFK & Associates, a consulting firm, and
from 1984 to 1989, he was Director, Loss Prevention of the Specialty Retailing
Group at General Mills, Inc.

     Ms. O'Keefe joined Talbots in 1989 as Director, Merchandise Administration.
In 1994, she was promoted to the position of Vice President, Merchandise
Administration. Prior to joining Talbots, Ms. O'Keefe held various merchandising
positions at Dayton Hudson Department Store where she was employed for nearly 20
years.

     Mr. Prescott joined Talbots in 1987 as Manager, Direct Marketing
Fulfillment. In 1988, he was promoted to the position of Director of Marketing
Fulfillment and in 1991 became Director, Customer Service and Telemarketing. In
1994, he was promoted to the position of Vice President, Customer Service and
Telemarketing. From 1976 to 1987, he was employed by Johnny Appleseed's serving
as manager of catalog operations and supervising retail distribution and
customer service.

     Mr. Siegler joined Talbots in 1993 as Vice President, Product Development.
From 1991 to 1993 he was Vice President, Sales and Marketing at Segrets, Inc. in
Beverly, Massachusetts, and from 1988 to 1991 he was President and Chief
Executive Officer at Crazy Horse, Inc., a division of Ross Togs, Inc. in New
York, New York.

     Ms. Staab was appointed Vice President, General Merchandise Manager in
1993. Ms. Staab joined Talbots as General Merchandise Manager in 1991. Prior to
joining Talbots, Ms. Staab was Senior Vice President, General Merchandise
Manager, Fashion Accessories, Shoes, Children's Clothing and Intimate Apparel at
Jordan Marsh. Prior to that time, she was Divisional Merchandise Manager,
Accessories and Better Sportswear and Special Sizes at Jordan Marsh.

     Ms. Main Tweet joined Talbots in 1993 as Vice President, Manufacturing.
From 1991 to 1993, Ms. Main Tweet was Vice President, Sourcing for Crystal
Brands Women's Wear Group. From 1990 to 1991, Ms. Main Tweet was Director,
Production for J. Crew, Inc., and from 1988 to 1990 she was Vice President,
Production for Bernard Chaus, Inc.


                                       16

<PAGE>   17



     Mr. Florio joined Talbots in 1990 as Director of Legal Services and
Assistant Secretary. From 1985 to 1990, he was Counsel for Corporate Property
Investors, a New York-based nationwide commercial real estate investment and
development firm.


ITEM 2. PROPERTIES.

<TABLE>
     The table below presents certain information relating to the Company's
properties at February 1, 1997:

<CAPTION>
    Location                   Gross Square Feet       Primary Function              Interest
    --------                   -----------------       ----------------              --------

<S>                                  <C>             <C>                             <C>
Hingham, Massachusetts               214,000         Company headquarters            Own (42 acres)
Lakeville, Massachusetts             717,260         Distribution center             Own (85 acres)
Knoxville, Tennessee                  23,595         Telemarketing                   Lease
Tampa, Florida                        29,250         Systems center                  Lease
New York, New York                     7,407         Product development office      Lease
New York, New York                    20,500         Product development office      Lease
Hong Kong                             10,455         Merchandising and sourcing      Lease
Ontario, Canada                        1,119         Canadian regional office        Lease
Brimsdown, U.K.                        1,000         U.K. management office          Lease

Stores throughout the U.S.,
   Canada and U.K.                                   Retail stores                   Own and lease (a)

</TABLE>

-------------
(a)  Talbots owns the property for eight of its 535 stores.


     Except for retail store space, the Company believes that its operating
facilities and sales offices are adequate and suitable for its current needs.
Talbots long-term expansion program, if successful, may require additional
office and distribution space to service such facilities in the future.

     At February 1, 1997, Talbots operated 535 stores, all but eight of which
were leased. The leases typically provide for an initial term of between ten and
fifteen years, with renewal options permitting the Company to extend the term
for between five and ten years thereafter. The Company generally has been
successful in renewing its store leases as they expire. Under most leases, the
Company pays a fixed annual base rent plus a contingent rent ("percentage rent")
based on the store's annual sales in excess of specified levels. The percentage
rent payment is typically 4% to 5% of annual sales in excess of the applicable
threshold. In a majority of leases negotiated since 1987, Talbots has a right to
terminate earlier than the specified expiration date if certain sales levels are
not achieved; such right is usually exercisable after five years of operation.
Most leases also require Talbots to pay real estate taxes, insurance and
utilities and, in shopping center locations, to make contributions toward the
shopping center's common area operating costs and

                                       17

<PAGE>   18



marketing programs. The Company has many lease arrangements that provide for an
increase in annual fixed rental payments during the lease term. At February 1,
1997, the current terms of Talbots store leases (assuming solely for this
purpose that the Company exercises all lease renewal options) were as follows:

      Years Lease                                           Number of
      Terms Expire                                        Store Leases(a)
      ------------                                        ---------------

      1997-1998.................................................6
      1999-2001................................................18
      2002-2004................................................32
      2005 and later..........................................380

--------
(a) Certain leases have more than one store included within the leased premises.



ITEM 3. LEGAL PROCEEDINGS.

         Talbots has been named as a defendant in certain legal actions arising
from its normal business activities. Although the amount of any liability that
could arise with respect to these actions cannot be accurately predicted, in the
opinion of the Company any such liability will not have a material adverse
effect on the financial position, results of operations or liquidity of Talbots.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1996.


                                       18

<PAGE>   19



                                     PART II


ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
        MATTERS.

     Information concerning the market in which the Company's common stock was
traded in 1996 and the approximate number of record holders of common stock and
certain other information called for by this Item 5 are set forth under the
captions "Selected Quarterly Financial Data" on page 31 and "Market for
Registrant's Common Stock and Related Stockholder Matters" on page 33 of Talbots
Annual Report to Shareholders for the fiscal year ended February 1, 1997 and is
incorporated herein by reference.

     At April 3, 1997, approximately 63.4% of Talbots common stock was held by
JUSCO USA.


ITEM 6. SELECTED FINANCIAL DATA.

     The information called for by this Item 6 is set forth under the caption
"Five Year Financial Summary" on page 12 of Talbots Annual Report to
Shareholders for the fiscal year ended February 1, 1997 and is incorporated
herein by reference.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
        OF OPERATIONS.

     The information called for by this Item 7 is set forth under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 13 to 16 of Talbots Annual Report to Shareholders for the
fiscal year ended February 1, 1997 and is incorporated herein by reference.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The report of independent auditors, the consolidated financial statements
of Talbots, the notes to consolidated financial statements, and the
supplementary financial information are set forth on pages 17 to 31 of Talbots
Annual Report to Shareholders for the fiscal year ended February 1, 1997 and are
incorporated herein by reference.



                                       19

<PAGE>   20



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
        FINANCIAL DISCLOSURE.

     Not applicable.

                                       20

<PAGE>   21



                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Information concerning Talbots directors under the caption "Election of
Directors" on pages 2 to 4 of Talbots Proxy Statement for Talbots 1997 Annual
Meeting of Shareholders, and the information concerning Talbots executive
officers set forth in Part I, Item 1 above under the caption "Executive and
other Officers of the Company," are incorporated herein by reference.


ITEM 11. EXECUTIVE COMPENSATION.

     The information set forth under the caption "Executive Compensation" on
pages 5 to 9 of Talbots Proxy Statement for Talbots 1997 Annual Meeting of
Shareholders (other than the information included under the captions "Executive
Compensation--Report on Compensation of Executive Officers" and "Executive
Compensation--Performance Graph", which are not incorporated herein), the
information concerning director compensation under the caption "Director
Compensation; Attendance; Committees" on page 4 of Talbots Proxy Statement for
Talbots 1997 Annual Meeting of Shareholders, and the information concerning
certain consultant/advisor fees under the caption "Compensation Committee
Interlocks and Insider Participation" on pages 11 to 12 of Talbots Proxy
Statement for Talbots 1997 Annual Meeting of Shareholders, are each incorporated
herein by reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information set forth under the caption "Beneficial Ownership of Common
Stock" on pages 13 to 14 of Talbots Proxy Statement for Talbots 1997 Annual
Meeting of Shareholders is incorporated herein by reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information set forth under the caption "Executive
Compensation--Certain Transactions with Related Parties" on pages 12 to 13 of
Talbots Proxy Statement for Talbots 1997 Annual Meeting of Shareholders is
incorporated herein by reference.

                                       21

<PAGE>   22



                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (a)(1)    FINANCIAL STATEMENTS: The following Independent Auditors' Report
               and Consolidated Financial Statements of Talbots are incorporated
               herein by reference to pages 17 to 30 of Talbots Annual Report to
               Shareholders for the fiscal year ended February 1, 1997:

                    Independent Auditors' Report

                    Consolidated Statements of Earnings for the Fifty-Two Weeks
                    Ended February 1, 1997, the Fifty-Three Weeks Ended February
                    3, 1996 and the Fifty-Two Weeks Ended January 28, 1995

                    Consolidated Balance Sheets at February 1, 1997 and February
                    3, 1996

                    Consolidated Statements of Cash Flows for the Fifty-Two
                    Weeks Ended February 1, 1997, the Fifty-Three Weeks Ended
                    February 3, 1996 and the Fifty-Two Weeks Ended January 28,
                    1995

                    Consolidated Statements of Stockholders' Equity for the
                    Fifty-Two Weeks Ended February 1, 1997, the Fifty-Three
                    Weeks Ended February 3, 1996 and the Fifty-Two Weeks Ended
                    January 28, 1995

                    Notes to Consolidated Financial Statements


     (a)(2)    FINANCIAL STATEMENT SCHEDULES: Financial statement schedules and
               the Independent Auditors Report on Schedules have been omitted
               because the required information is either presented in the
               Consolidated Financial Statements or the Notes thereto or is not
               applicable, required or material.


     (a)(3)    The following Exhibits are filed as part of, or incorporated by
               reference into, this Annual Report:


                                       22

<PAGE>   23



Exhibit
-------

(3)  Articles of Incorporation and By-laws.
     -------------------------------------

     3.1    Certificate of Incorporation, as amended, of Talbots.(1)

     3.2    By-laws of Talbots.(1)

(4)  Instruments Defining the Rights of Security Holders, including Indentures.
     -------------------------------------------------------------------------
 
     4.1    Form of Common Stock Certificate of Talbots.(1)

(10) Material Contracts.
     ------------------

     10.1   Stockholders Agreement, dated as of November 18, 1993, between
            Talbots and JUSCO USA.(2)

     10.2   Revolving Credit Agreement, dated as of January 25, 1994 between
            Talbots and The Dai-Ichi Kangyo Bank, Limited.(2)

     10.3   Revolving Credit Agreement, dated as of January 25, 1994 between
            Talbots and The Bank of Tokyo Trust Company.(2)

     10.4   Revolving Credit Agreement, dated as of January 25, 1994 between
            Talbots and The Norinchukin Bank.(2)

     10.5   Revolving Credit Agreement, dated as of January 25, 1994 between
            Talbots and The Daiwa Bank, Limited.(2)

     10.6   Revolving Credit Agreement, dated as of January 25, 1994 between
            Talbots and The Sakura Bank, Limited.(2)

     10.7   Letter Agreement, dated as of January 31, 1994, concerning various
            credit facilities, between Talbots and The First National Bank of
            Boston.(2)

     10.8   Letter Agreement, dated as of September 26, 1994, concerning
            various credit facilities, between Talbots and The First National
            Bank of Boston.(4)

     10.9   Letter of Credit Agreement, dated as of August 10, 1993, between
            Talbots and The First National Bank of Boston.(1)

     10.10  Request for Extension dated December 20, 1996, relating to the
            Revolving Credit Agreement, from Talbots to The Dai-Ichi Kangyo
            Bank, Limited,

                                       23

<PAGE>   24



            together with a Confirmation of Extension letter dated January 28,
            1997 from The Dai-Ichi Kangyo Bank, Limited to Talbots.(7)

     10.11  Request for Extension dated December 28, 1994, relating to the
            Revolving Credit Agreement, from Talbots to The Daiwa Bank,
            Limited, together with an acceptance letter dated January 27, 1995
            from The Daiwa Bank, Limited to Talbots.(4)

     10.12  Request for Extension dated December 20, 1996, relating to the
            Revolving Credit Agreement, from Talbots to The Norinchukin Bank,
            together with an Acceptance of Extension letter dated January 17,
            1997 from The Norinchukin Bank to Talbots.(7)

     10.13  Request for Extension dated December 20, 1996, relating to the
            Revolving Credit Agreement, from Talbots to The Sakura Bank,
            Limited, together with an acceptance letter dated January 24, 1997
            from The Sakura Bank, Limited to Talbots.(7)

     10.14  Request for Extension dated December 20, 1996, relating to the
            Revolving Credit Agreement, from Talbots to The Bank of
            Tokyo-Mitsubishi Trust Company, together with an Acceptance of 
            Extension letter dated January 27, 1997 from The Bank of Tokyo 
            Trust Company to Talbots.(7)

     10.15  Trademark Purchase and License Agreement, dated as of November 26,
            1993, between JUSCO (Europe) B.V. and The Classics Chicago, Inc.(2)

     10.16  Management Service Agreement, effective as of February 1, 1990, by
            and between Talbots Japan Co., Ltd. and Talbots.(1)

     10.17  Services Agreement, dated as of November 18, 1993, between Talbots
            Japan Co., Ltd. and Talbots.(2)

     10.18  Stock Purchase Agreement, dated as of November 26, 1993, between
            Talbots and JUSCO.(2)

     10.19  License Agreement, dated as of November 26, 1993, between The
            Classics Chicago, Inc., Talbots, Talbots International Retailing
            Limited, Inc., Talbots (Canada), Inc. and Talbots (U.K.) Retailing
            Limited.(2)

     10.20  Tax Allocation Agreement, dated as of November 18, 1993, between
            JUSCO USA, Talbots, Talbots International Retailing Limited, Inc.,
            Talbots (U.K.) Retailing Limited and The Classics Chicago, Inc.(2)


                                       24

<PAGE>   25



     10.21  The Talbots, Inc. Pension Plan for Salaried Employees, as amended
            and restated January 1, 1989, including amendments through January
            1, 1994.(4)

     10.22  The Talbots, Inc. Retirement Savings Voluntary Plan, as amended
            and restated, effective as of November 1, 1993.(4)

     10.23  Agreement, dated as of November 26, 1993, between JUSCO (Europe)
            B.V. and Talbots concerning the termination of the License
            Agreement, effective as of June 26, 1988, between JUSCO Europe and
            Talbots.(2)

     10.24  Services Agreement, dated as of October 29, 1989, between Talbots
            and JUSCO USA.(1)

     10.25  Share Purchase Agreement dated as of February 21, 1995 between
            Talbots and JUSCO USA.(3)

     10.26  Extended Share Purchase Agreement, dated as of November 8, 1995,
            between Talbots and JUSCO USA.(5)

     10.27  First Amendment to the Revolving Credit Agreement dated as of
            January 25, 1994 between Talbots and The Dai-Ichi Kangyo Bank,
            Ltd. dated November 21, 1995.(6)

     10.28  First Amendment to the Revolving Credit Agreement dated as of
            January 25, 1994 between Talbots and The Norinchukin Bank dated
            November 21, 1995.(6)

     10.29  First Amendment to the Revolving Credit Agreement dated as of
            January 25, 1994 between Talbots and The Sakura Bank, Ltd. dated
            November 21, 1995.(6)

     10.30  First Amendment to the Revolving Credit Agreement dated as of
            January 25, 1994 between Talbots and The Bank of Tokyo Trust Co.
            dated November 21, 1995.(6)

     10.31  Termination Agreement dated as of November 27, 1995 between
            Talbots and The Daiwa Bank, Ltd., New York Branch.(6)

     10.32  HongkongBank Letter of Credit Service Agreement, dated as of April
            19, 1996 together with a Continuing Commercial Letter of Credit
            and Security Agreement dated May 15, 1996 and a Hexagon Customer
            Agreement, dated May 15, 1996, between Talbots and The Hongkong
            and Shanghai Banking Corporation Limited.(7)


                                       25

<PAGE>   26



     10.33  Amendment to License Agreement, dated January 29, 1997, among
            The Classics Chicago, Inc., Talbots, Talbots International
            Retailing Limited, Inc., Talbots (Canada), Inc., and Talbots
            (U.K.) Retailing, Ltd.(7)


     Management Contracts and Compensatory Plans and Arrangements.
     -------------------------------------------------------------

     10.34  Contract between Masaharu Isogai and Talbots, dated as of November
            18, 1993.(2)

     10.35  Talbots Phantom Stock Plan, effective as of January 29, 1989.(1)

     10.36  Amendment No. 1 to the Talbots Phantom Stock Plan, dated as of
            November 18, 1993.(2)

     10.37  The Talbots, Inc. Supplemental Retirement Plan, effective as of
            June 27, 1988.(1)

     10.38  The Talbots, Inc. Supplemental Savings Plan (amended and restated
            as of January 1, 1993).(1)

     10.39  The Talbots, Inc. Deferred Compensation Plan (amended and restated
            as of January 1, 1993).(1)

     10.40  The Talbots, Inc. Supplemental Benefits Trust Agreement, dated as
            of November 18, 1993, between Talbots and State Street Bank and
            Trust Company.(2)

     10.41  The Talbots, Inc. 1993 Executive Stock Based Incentive Plan.(2)

     10.42  Employment Agreement, dated as of October 22, 1993, between Arnold
            B. Zetcher and Talbots.(1) (as amended by Amendment No. 1 dated May
            11, 1994).(4)

     10.43  Amendment No. 1 to The Talbots, Inc. Supplemental Retirement Plan,
            dated as of November 18, 1993.(2)

     10.44  Amendment No. 1 to The Talbots, Inc. Supplemental Savings Plan,
            dated as of November 18, 1993.(2)

     10.45  Amendment No. 1 to The Talbots, Inc. Deferred Compensation Plan,
            dated as of November 18, 1993.(2)


                                       26

<PAGE>   27



     10.46  Employment Agreement, dated as of October 22, 1993, between Clark
            Hinkley and The Talbots, Inc.(2) (as amended by Amendment No. 1
            dated May 11, 1994).(4)

     10.47  Change in Control Agreements, dated as of November 11, 1993,
            between Talbots and each of J. Bruce Ash, Edward Larsen, Michele
            Mandell, Ronald Ramseyer, Richard T. O'Connell, Bruce Soderholm,
            Stuart Stolper, Jacqueline Corso, Paul Kastner, Sandy Katz, Steven
            Siegler and Lucy Main Tweet.(2)

     10.48  Change in Control Agreements, dated August 22, 1994, between
            Talbots and each of Judith O'Keefe and Bruce Prescott.(4)

(11) Statement re Computation of Per Share Earnings
     ----------------------------------------------

     11.1   Computation of weighted average number of shares outstanding used
            in determining primary and fully diluted earnings per share.

(13) Annual Report to Security Holders
     ---------------------------------

     13.1   Excerpts from the 1996 Annual Report of Talbots incorporated by
            reference. 


(21) Subsidiaries.
     ------------

     21.1   List of subsidiaries of Talbots.(1)

(23) Consents of Experts and Counsel.
     -------------------------------
 
     23.1   Independent Auditors' Consent of Deloitte & Touche LLP.

--------------------

     (1) Incorporated by reference to the exhibits filed with Talbots
Registration Statement on Form S-1 (No. 33-69082), which Registration Statement
became effective November 18, 1993.

     (2) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated April 25, 1994.

     (3) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated February 21, 1995.

     (4) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated April 27, 1995.

     (5) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated November 8, 1995.


                                       27

<PAGE>   28



     (6) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated November 21, 1995.

     (7) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated April 30, 1997.


(b)  REPORT ON FORM 8-K: Reports on Form 8-K filed during the fourth quarter of
     fiscal 1996:

          (i)  Current Report on Form 8-K dated October 30, 1996 and filed
               November 13, 1996 concerning forward looking statements.

          (ii) Current Report on Form 8-K dated April 30, 1997 and filed May 1,
               1997 concerning exhibits to Form 10-K.


With the exception of the information incorporated by reference to the Annual
Report to Shareholders in Items 5, 6, 7 and 8 of Part II and Item 14 of Part IV
of this Annual Report, Talbots 1996 Annual Report to Shareholders is not to be
deemed filed as part of this Annual Report.

                                       28

<PAGE>   29



                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated: April 30, 1997

       THE TALBOTS, INC.
       (Registrant)


       By /s/  Edward Larsen
          --------------------------------------------
          Edward L. Larsen
          Senior Vice President, Finance, and Chief
          Financial Officer and Treasurer (Principal
          Financial and Accounting Officer)

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of April 30, 1997:



/s/ Arnold B. Zetcher                         /s/ Masaharu Isogai
-----------------------------------           ---------------------------------
Arnold B. Zetcher                             Masaharu Isogai
President and Chief Executive                 Director
Officer and Director




                                              /s/ Elizabeth T. Kennan
-----------------------------------           ---------------------------------
Takuya Okada                                  Elizabeth T. Kennan
Chairman of the Board of                      Director
Directors





-----------------------------------           ---------------------------------
Eiji Akiyama                                  Motoya Okada
Director                                      Director



/s/ Clark J. Hinkley                          /s/ Mark H. Willes
-----------------------------------           ---------------------------------
Clark J. Hinkley                              Mark H. Willes
Director                                      Director


<PAGE>   30

                                  EXHIBIT INDEX
                                  -------------

Exhibit
-------

(3)  Articles of Incorporation and By-laws.
     -------------------------------------

     3.1    Certificate of Incorporation, as amended, of Talbots.(1)

     3.2    By-laws of Talbots.(1)

(4)  Instruments Defining the Rights of Security Holders, including Indentures.
     -------------------------------------------------------------------------
 
     4.1    Form of Common Stock Certificate of Talbots.(1)

(10) Material Contracts.
     ------------------

     10.1   Stockholders Agreement, dated as of November 18, 1993, between
            Talbots and JUSCO USA.(2)

     10.2   Revolving Credit Agreement, dated as of January 25, 1994 between
            Talbots and The Dai-Ichi Kangyo Bank, Limited.(2)

     10.3   Revolving Credit Agreement, dated as of January 25, 1994 between
            Talbots and The Bank of Tokyo Trust Company.(2)

     10.4   Revolving Credit Agreement, dated as of January 25, 1994 between
            Talbots and The Norinchukin Bank.(2)

     10.5   Revolving Credit Agreement, dated as of January 25, 1994 between
            Talbots and The Daiwa Bank, Limited.(2)

     10.6   Revolving Credit Agreement, dated as of January 25, 1994 between
            Talbots and The Sakura Bank, Limited.(2)

     10.7   Letter Agreement, dated as of January 31, 1994, concerning various
            credit facilities, between Talbots and The First National Bank of
            Boston.(2)

     10.8   Letter Agreement, dated as of September 26, 1994, concerning
            various credit facilities, between Talbots and The First National
            Bank of Boston.(4)

     10.9   Letter of Credit Agreement, dated as of August 10, 1993, between
            Talbots and The First National Bank of Boston.(1)

<PAGE>   31

     10.10  Request for Extension dated December 20, 1996, relating to the
            Revolving Credit Agreement, from Talbots to The Dai-Ichi Kangyo
            Bank, Limited, together with a Confirmation of Extension letter 
            dated January 28, 1997 from The Dai-Ichi Kangyo Bank, Limited to 
            Talbots.(7)

     10.11  Request for Extension dated December 28, 1994, relating to the
            Revolving Credit Agreement, from Talbots to The Daiwa Bank,
            Limited, together with an acceptance letter dated January 27, 1995
            from The Daiwa Bank, Limited to Talbots.(4)

     10.12  Request for Extension dated December 20, 1996, relating to the
            Revolving Credit Agreement, from Talbots to The Norinchukin Bank,
            together with an Acceptance of Extension letter dated January 17,
            1997 from The Norinchukin Bank to Talbots.(7)

     10.13  Request for Extension dated December 20, 1996, relating to the
            Revolving Credit Agreement, from Talbots to The Sakura Bank,
            Limited, together with an acceptance letter dated January 24, 1997
            from The Sakura Bank, Limited to Talbots.(7)

     10.14  Request for Extension dated December 20, 1996, relating to the
            Revolving Credit Agreement, from Talbots to The Bank of
            Tokyo-Mitsubishi Trust Company, together with an Acceptance of 
            Extension letter dated January 27, 1997 from The Bank of Tokyo 
            Trust Company to Talbots.(7)

     10.15  Trademark Purchase and License Agreement, dated as of November 26,
            1993, between JUSCO (Europe) B.V. and The Classics Chicago, Inc.(2)

     10.16  Management Service Agreement, effective as of February 1, 1990, by
            and between Talbots Japan Co., Ltd. and Talbots.(1)

     10.17  Services Agreement, dated as of November 18, 1993, between Talbots
            Japan Co., Ltd. and Talbots.(2)

     10.18  Stock Purchase Agreement, dated as of November 26, 1993, between
            Talbots and JUSCO.(2)

     10.19  License Agreement, dated as of November 26, 1993, between The
            Classics Chicago, Inc., Talbots, Talbots


<PAGE>   32

            International Retailing Limited, Inc., Talbots (Canada), Inc. and
            Talbots (U.K.) Retailing Limited.(2)

     10.20  Tax Allocation Agreement, dated as of November 18, 1993, between
            JUSCO USA, Talbots, Talbots International Retailing Limited, Inc.,
            Talbots (U.K.) Retailing Limited and The Classics Chicago, Inc.(2)
            
     10.21  The Talbots, Inc. Pension Plan for Salaried Employees, as amended
            and restated January 1, 1989, including amendments through January
            1, 1994.(4)

     10.22  The Talbots, Inc. Retirement Savings Voluntary Plan, as amended
            and restated, effective as of November 1, 1993.(4)

     10.23  Agreement, dated as of November 26, 1993, between JUSCO (Europe)
            B.V. and Talbots concerning the termination of the License
            Agreement, effective as of June 26, 1988, between JUSCO Europe and
            Talbots.(2)

     10.24  Services Agreement, dated as of October 29, 1989, between Talbots
            and JUSCO USA.(1)

     10.25  Share Purchase Agreement dated as of February 21, 1995 between
            Talbots and JUSCO USA.(3)

     10.26  Extended Share Purchase Agreement, dated as of November 8, 1995,
            between Talbots and JUSCO USA.(5)

     10.27  First Amendment to the Revolving Credit Agreement dated as of
            January 25, 1994 between Talbots and The Dai-Ichi Kangyo Bank,
            Ltd. dated November 21, 1995.(6)

     10.28  First Amendment to the Revolving Credit Agreement dated as of
            January 25, 1994 between Talbots and The Norinchukin Bank dated
            November 21, 1995.(6)

     10.29  First Amendment to the Revolving Credit Agreement dated as of
            January 25, 1994 between Talbots and The Sakura Bank, Ltd. dated
            November 21, 1995.(6)

     10.30  First Amendment to the Revolving Credit Agreement dated as of
            January 25, 1994 between Talbots and The Bank of Tokyo Trust Co.
            dated November 21, 1995.(6)


<PAGE>   33

     10.31  Termination Agreement dated as of November 27, 1995 between
            Talbots and The Daiwa Bank, Ltd., New York Branch.(6)

     10.32  HongkongBank Letter of Credit Service Agreement, dated as of April
            19, 1996 together with a Continuing Commercial Letter of Credit
            and Security Agreement dated May 15, 1996 and a Hexagon Customer
            Agreement, dated May 15, 1996, between Talbots and The Hongkong
            and Shanghai Banking Corporation Limited.(7)

     10.33  Amendment to License Agreement, dated January 29, 1997, among
            The Classics Chicago, Inc., Talbots, Talbots International
            Retailing Limited, Inc., Talbots (Canada), Inc., and Talbots
            (U.K.) Retailing, Ltd.(7)


     Management Contracts and Compensatory Plans and Arrangements.
     -------------------------------------------------------------

     10.34  Contract between Masaharu Isogai and Talbots, dated as of November
            18, 1993.(2)

     10.35  Talbots Phantom Stock Plan, effective as of January 29, 1989.(1)

     10.36  Amendment No. 1 to the Talbots Phantom Stock Plan, dated as of
            November 18, 1993.(2)

     10.37  The Talbots, Inc. Supplemental Retirement Plan, effective as of
            June 27, 1988.(1)

     10.38  The Talbots, Inc. Supplemental Savings Plan (amended and restated
            as of January 1, 1993).(1)

     10.39  The Talbots, Inc. Deferred Compensation Plan (amended and restated
            as of January 1, 1993).(1)

     10.40  The Talbots, Inc. Supplemental Benefits Trust Agreement, dated as
            of November 18, 1993, between Talbots and State Street Bank and
            Trust Company.(2)

     10.41  The Talbots, Inc. 1993 Executive Stock Based Incentive Plan.(2)


<PAGE>   34

     10.42  Employment Agreement, dated as of October 22, 1993, between Arnold
            B. Zetcher and Talbots.(1) (as amended by Amendment No. 1 dated May
            11, 1994).(4)

     10.43  Amendment No. 1 to The Talbots, Inc. Supplemental Retirement Plan,
            dated as of November 18, 1993.(2)

     10.44  Amendment No. 1 to The Talbots, Inc. Supplemental Savings Plan,
            dated as of November 18, 1993.(2)

     10.45  Amendment No. 1 to The Talbots, Inc. Deferred Compensation Plan,
            dated as of November 18, 1993.(2)

     10.46  Employment Agreement, dated as of October 22, 1993, between Clark
            Hinkley and The Talbots, Inc.(2) (as amended by Amendment No. 1
            dated May 11, 1994).(4)

     10.47  Change in Control Agreements, dated as of November 11, 1993,
            between Talbots and each of J. Bruce Ash, Edward Larsen, Michele
            Mandell, Ronald Ramseyer, Richard T. O'Connell, Bruce Soderholm,
            Stuart Stolper, Jacqueline Corso, Paul Kastner, Sandy Katz, Steven
            Siegler and Lucy Main Tweet.(2)

     10.48  Change in Control Agreements, dated August 22, 1994, between
            Talbots and each of Judith O'Keefe and Bruce Prescott.(4)

(11) Statement re Computation of Per Share Earnings
     ----------------------------------------------

     11.1   Computation of weighted average number of shares outstanding used
            in determining primary and fully diluted earnings per share.

(13) Annual Report to Security Holders
     ---------------------------------

     13.1   Excerpts from the 1996 Annual Report of Talbots incorporated by
            reference. 


(21) Subsidiaries.
     ------------

     21.1   List of subsidiaries of Talbots.(1)

(23) Consents of Experts and Counsel.
     -------------------------------
 
     23.1   Independent Auditors' Consent of Deloitte & Touche LLP.

(99) Additional Exhibits
     -------------------

     99.1   Excerpts from the 1996 Annual Report of Talbots incorporated by
            reference. 

-------------
<PAGE>   35

     (1) Incorporated by reference to the exhibits filed with Talbots
Registration Statement on Form S-1 (No. 33-69082), which Registration Statement
became effective November 18, 1993.

     (2) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated April 25, 1994.

     (3) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated February 21, 1995.

     (4) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated April 27, 1995.

     (5) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated November 8, 1995.

     (6) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated November 21, 1995.

     (7) Incorporated by reference to the exhibits filed with Talbots Current
Report on Form 8-K dated April 30, 1997.