Retail shares tumbled Tuesday morning after Citigroup Inc. reported a treacherous loss in the fourth quarter.
The Dow Jones Industrial Average was down 0.7 percent to 12,688.77, while the broader S&P 500 slid 1 percent to 1,401.84. The S&P Retail Index dropped 1.6 percent to 365.90.
Baby Boomer retailer Coldwater Creek said after market on Monday that it would miss fourth-quarter expectations, sending its shares down more than 27 percent to a 52-week low of $3.80 in early-morning trading.
The company said it now expects to post a loss of 16 to 20 cents a diluted share, down from its break-even forecast.
“We believe it is best for investors to stay on the sidelines and monitor any progress that may ensue in the coming quarters, especially with the spring assortments for late March to early April,” Mark Montagna, retail analyst at C.L. King & Associates, said in a research note on Coldwater Creek. “The precipitous decline in its performance in just one year makes it exceedingly difficult to project future earnings. The company has suffered from the overall demise of the missy customer sector and high promotions at department stores. However, it also appears to be suffering from an expense structure that needs to be pared back. Its own merchandise may have lost appeal with the customer base.”
New York & Company also slashed fourth-quarter earnings guidance, causing shares of the women’s apparel retailer to fall in early-session trading. Shares dropped more than 11 percent to $4.42 after the company said it now expects earnings in the range of 15 to 19 cents a diluted share, from previous guidance of 23 to 32 cents a share.
“With the announced closure of JasmineSola by the end of fiscal 2007, we believe investors should look to fiscal 2008 earnings per share to value the company,” Montagna said in a note. “The downside fourth-quarter earnings per share is reflective of a poor macro environment but not reflective of key operational changes that should help fiscal 2008.”
For more, see Wednesday’s issue of WWD.