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Coldwater Shares Fall on Downward Revisions

Coldwater Creek Inc. reports preliminary Q3 results far below estimates and withdraws Q4 guidance.

Shares of Coldwater Creek Inc. lost almost one-quarter of their value Tuesday after the company reported preliminary third-quarter results well below Wall Street estimates and withdrew its fourth-quarter guidance in light of rapidly declining sales.


The Sandpoint, Idaho-based women’s apparel retailer said it anticipated third-quarter sales of about $225 million and a loss of 7 cents to 9 cents a share, reflecting a same-store sales decline of more than 20 percent. The company originally expected to end the quarter with earnings per share of between 2 cents and 7 cents on revenues of $261 million to $279 million. Analysts polled by Yahoo estimated EPS of 3 cents on sales of $264.9 million.

Overwhelmed by the economic downturn, the company said it experienced “significant deterioration” in its traffic and sales beginning the second weekend in October. As a result, Coldwater Creek said it was withdrawing its fourth-quarter earnings guidance of 4 cents to 10 cents a share on sales of $338 million to $361 million.

Coldwater expects to end the third quarter with about $70 million in cash, and for retail and distribution center inventory to decrease roughly 19 percent compared with the 2007 quarter.

Shares finished Tuesday’s session at $2.59, down 82 cents, or 24.1 percent.

With a continued focus on controlling expenses and managing inventory, the retailer said it plans to reduce store growth plans for next year to 15 new stores, down from previous plans of approximately 40 stores.

“We believe that, through our improved product and customer experience and cost savings initiatives, we have positioned the company for long-term success,” said president and chief executive officer Dan Griesemer. “However, the overall macroeconomic environment has proven to be substantially more challenging than anticipated.”

Coldwater Creek said by the end of the year it anticipates total inventory to be down about 10 percent versus last year, and it will have more than $75 million in cash, compared with $62.5 million in cash in 2007.

Selling, general and administrative costs are expected to be down about $50 million from the 2007 level of $460.9 million, the company said. Capital expenditures next year will be trimmed to an estimated $40 million, about half the amount the company expects this year.

C.L. King & Associates retail analyst Mark Montagna downgraded the company’s stock to “neutral” from “strong buy” on Tuesday. “Coldwater has the balance sheet strength to muddle through this economic weakness and be a survivor,” he said, warning that investors should “stay on the sidelines until the company posts actual results that prove an earnings recovery has begun.”