Coldwater Creek books Q4 in the red
Shares of Coldwater Creek Inc. (Nasdaq: CWTR) are lower today following the women’s retailer’s release after Wednesday’s close that it slipped to a fourth-quarter loss and issued 2008 guidance below analysts’ expectations.
The small-cap retailer attributed its fourth-quarter results to a decline in comparable retail traffic as well as a lower average price per transaction due to clearance sales.
For the three months ended Feb. 2, 2008, the Sandpoint, Idaho-based company posted a net loss of $17 million, or $0.19 per share, compared with net profit of $15.9 million, or $0.17 per share, for the fourth quarter of 2007.
Net sales for the quarter declined to $345.5 million from $366.6 million in the 2007 quarter, while comparable store sales declined 19.2% in the fourth quarter from the same quarter last year.
For fiscal 2008, Coldwater Creek guided below the consensus on Wall Street. The company is forecasting sales in the range of $1.05 billion to $1.13 billion and a bottom-line ranging from break-even to a net loss of $0.20 per share. Fourteen analysts surveyed by Thomson Financial were on average projecting sales of $1.29 billion, while 15 analysts polled by Thomson Financial were on average estimating earnings of $0.12 per share.
For the first quarter, the small cap expects a net loss in the range of $0.14 to $0.17 per share and sales of $233 million to $246 million. The company’s forecasts compare with the Thomson mean estimates of 10 analysts of a net loss of $0.04 per share on sales of $295.01 million.
Coldwater noted that its guidance reflects a decrease in brand spending in 2008. The company said it expects to spend approximately $10 million on national brand advertising in fiscal 2008, compared with approximately $30 million spent on national brand advertising in 2007.
The company also said guidance includes plans to open a total of approximately 50 stores for the full year and as a result, expects capital expenditures for fiscal 2008 to be approximately $90 million.
“Looking ahead to 2008, management is guiding SG&A dollars lower than we expected, thanks mainly to significant expense cuts planned in marketing,” UBS analyst Michelle Tan wrote in a research note today. “However, with national ad dollars planned down 70% and catalog mailings down 20%, we fully expect the benefit of 2008 expense savings to be offset by decelerating sales and increasing markdowns in both stores and the direct channel.”
As a result, the analyst is maintaining her EPS estimate for the first quarter at a loss of $0.16 per share.
“We still see significant operating risk, as the boomer segment has yet to show signs of recovery, and management has not been evolving its strategy rapidly enough despite five quarters of weakness in the sector,” wrote Tan. “But risk/reward is balanced by low expectations — shares are 84% below their year high.”
Shares of Coldwater Creek (CWTR) sunk 22.02%, or $1.11, to $3.93 at 2:37 p.m. ET. Shares of Coldwater Creek have been trading in the range of $3.40 to $25.69 for the past 52 weeks.
