By  on October 27, 2009

Lower-than-expected sales and increased markdowns led Caché Inc. to an expanded third-quarter loss, but the women’s apparel retailer said it expects to be profitable in the fourth quarter.

The New York-based firm said for the period ended Sept. 26, its net loss rose to $6.8 million, or 53 cents a diluted share, compared with a loss of $1.6 million, or 12 cents a share, in the year-ago quarter.

Excluding separation agreement costs, the company said its net loss totaled $5.5 million, or 43 cents a share, versus a net loss of $1.4 million, or 10 cents a share, last year.

Net sales fell 22.7 percent to $44.9 million, from $58.1 million in 2008, as quarterly same-store sales declined 21.7 percent, versus a 3.9 percent dip last year. Analysts polled by Yahoo were looking for a net loss of 20 cents a share on revenue of $48.3 million. Gross profit for the quarter was $14.2 million, or 31.6 percent of net sales, versus $25.6 million, or 44.1 percent of net sales, a year earlier.

Chairman and chief executive officer Thomas Reinckens said on an earnings call the “disappointing” results were due in part to “accelerated” markdowns to clear out inventory in anticipation of new fall and holiday assortments, as well as a “less-than-enthusiastic response” to promotional offers in its September mailer. Because discounts in the mailer were not as steep as a year ago, the ceo concluded the consumer is still “very much focused on the coupon on offer.”

As a result, Caché returned with its typical offer in its October mailer, and has since seen sales trends improve, Reinckens said. The company will “intensify the breadth” of its opening price point offerings in the future, he said, and planned to offer larger sizes and expand its casual assortment.

For the nine months, Caché said its net loss expanded to $7.5 million, or 59 cents a share, compared with a loss of $1.6 million, or 12 cents a share, a year earlier. Excluding onetime items, the retailer said its net loss was $6.2 million, or 48 cents, versus a profit of $531,000, or 4 cents a share. Revenue contracted 22.5 percent to $154.8 million, from $199.8 million, in the prior year.

The retailer introduced fourth-quarter earnings guidance of between 12 cents and 15 cents a share, on sales in the range of $62 million to $64 million. Analysts had anticipated earnings per share of 8 cents on revenue of $60.9 million.

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