CLAIRE’S NET PLUNGES, ISSUES PROFIT WARNING

NEW YORK — Claire’s Stores said slower foot traffic and reduced spending sent profits tumbling 82.8 percent in its third quarter and that, if current trends continue, the current quarter’s profits could fall well short of Wall Street’s expectations.
For the quarter ended Nov. 3, the Pembroke Pines, Fla.-based teen jewelry and accessory specialty retailer posted net income of $2.4 million, or 5 cents a diluted share, compared with profits of $13.8 million, or 28 cents a share, in the year-ago quarter. Sales slipped 5.5 percent, to $234 million from $247.5 million, and were off 5 percent on a comparable-store basis.
Although pleased with the European Claire’s Accessories and the Icing by Claire’s stores, Rowland Schaefer, chairman and chief executive officer, said in a statement: “We were disappointed with the results from our Claire’s Accessories North America stores, which were below plan. We believe the results at our Claire’s North America operations were affected by lower traffic patterns and a lack of consumer spending resulting from an already difficult retail environment.”
However, the company said if current comp trends continue to run in the negative mid-single- to high-single-digit range, fourth-quarter profits will come in at 40 to 45 cents a share, shy of the 66 cents Wall Street penciled.
For the nine months, net income fell 88 percent, to $4.2 million, or 9 cents a share, versus $35 million, or 69 cents. Sales were down 2.5 percent, to $713.2 million from $731.5 million, and fell 3 percent on a comp basis.

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