Charlotte Russe sinks to 3-year low on outlook

Charlotte Russe Inc. shares reached a three-year low on Thursday after the women's apparel retailer reported fiscal third-quarter earnings and issued a fourth-quarter guidance that an analyst called "quite disappointing."

Shares fell $2.19, or 15 percent, to $12.44 during morning trading, after earlier reaching a three-year low of $12.05.

Late Wednesday, the company said it expected earnings between 15 cents and 23 cents per share for the September quarter, excluding charges related to the departure of the company's chief executive earlier this month and transition costs.

Analysts polled by Thomson Financial, on average, expect a profit of 30 cents per share. Analyst estimates typically exclude one-time charges.

Also on Wednesday, San Diego-based Charlotte Russe reported that profit for the quarter ended June 28 rose 35 percent to $6.6 million, or 31 cents per share, from $10.1 million, or 40 cents per share, in the comparable quarter last year. Analysts predicted a profit of 31 cents per share.

Revenue rose 7 percent to $193.2 million from $180.3 million. Analysts expected $194.9 million in revenue.

Sales in stores open at least one year, a key retail metric known as same-store sales, fell 10.4 percent during the quarter. Same-store sales is considered an important retail performance indicator because it measures sales at existing stores rather than newly opened ones.

Roth Capital Partners analyst Elizabeth Pierce said in a note to investors on Thursday that the guidance was disappointing, but said "given the current economic climate and a recent merchandise misstep, we are not surprised that management is taking a cautionary stance about the fall/holiday season."

Pierce said although the company is focused on the right fashion and value message, earnings are likely limited in the near-term amid a difficult retail environment.

"We believe the stock lacks a near-term catalyst," she said. "Accordingly, we are downgrading to a 'Hold' rating from 'Buy' and lowering our price target to $14 from $17."