Fashion miscues and a shortage of inventory contributed to a fourth-quarter loss at Cache Inc. that was both unexpected and larger than its year-ago counterpart.
For the three months ended Jan 1., Cache’s net loss stretched to $14.2 million, or $1.11 cents a diluted share, compared with a loss of $1.2 million, or 9 cents a share, in the year-ago period. Excluding charges, the retailer said its net loss totaled $2 million, or 16 cents a share. Analysts polled by Yahoo Finance, on average, expected a profit of 9 cents a share.
Net sales slid 14 percent to $55.9 million, from $65 million, a year earlier. Same-store sales fell 6 percent as increased promotions and low inventory caused quarterly gross margin to decline to 38.1 percent of sales, from a year-ago margin of 40.9 percent.
Calling the results “disappointing,” Thomas Reinckens, chairman, president and chief executive officer, said on the quarterly conference call that the company’s sportswear, dress and accessories offerings were “too conservative and lacked the edge” its customer expects.
“There is no question the significant amount of changes we implemented in our merchant, design and production teams contributed to our results. Quite simply, our new team needed additional time to learn about the Cache customer,” he said, adding that he expects positive merchandising changes to take hold this spring.
For the year, Cache’s net loss widened to $22.4 million, or $1.76 a diluted share, compared with a loss of $8.7 million, or 68 cents a share in 2009. Sales declined 6 percent, to $206.5 million from $219.8 million.
The company said it expects a net loss in the first quarter ranging from 7 cents to 9 cents a diluted share. For the second quarter, the retailer predicted a return to profitability with EPS of 16 cents to 18 cents. Analysts did not provide second-quarter projections, but they anticipated a first-quarter net loss of 12 cents.
The 280-door women’s apparel retailer said it won’t open any stores and it expects to shutter four locations in 2011.
Shares Monday closed at $4.46, down 16 cents, or 3.5 percent, as the S&P Retail Index ticked up less than 0.1 percent to 520.25.
The largest percentage decline among the 170 equities tracked by WWD came from American Apparel Inc., which was off 16 cents, or 17.8 percent, to 74 cents. The Los Angeles-based vertical retailer’s bank loans will go into default unless it can furnish audited financial statements that do not contain a “going concern” qualification by April 30 or have that requirement waived.