Women’s apparel retailer Coldwater Creek
The company’s top line recorded an ugly 28% plunge, to $181.4 million from the same quarter last year. Sales were down in stores as well as in the direct business segment which includes online, phone, and mail orders. The company reported a loss of $27.7 million compared to a profit of $1.5 million last year. The loss of $0.30 per share was worse than Street’s loss expectations of $0.20 per share.
Circle the wagons!
Coldwater Creek is working on plans to implement a much-needed long-term strategy to return to profitability. Under the merchandising revitalization plan, the company will revamp its product line, preparing better products for the fall and holiday season. The company plans to back this up with strong marketing initiatives. In an industry where rivals such as Chico’s FAS
Gross margin fell in the quarter, and the company has not reported profits in the past four quarters. That’s at a time when competitors like Chico’s FAS and Ann Taylor are posting strong profit growth, making me question Coldwater’s ability to thrive.
The Foolish bottom line
Coldwater Creek seems to be facing some serious strategic challenges. Though the new long-term plans may help the company turn around, I doubt whether it will meet investors’ expectations. Fools, be warned.
To keep a watch on these apparel makers: