You've got to love it when a company reports news that's not as bad as previously expected, and investors go wild in response. That appears to be happening today with Coldwater Creek
The hot news was that Coldwater Creek's second-quarter results will either break even or come in at a profit of $0.02 per share. The company had previously expected a net loss between $0.03 per share and $0.09 per share.
For the entire year, Coldwater Creek now forecasts a range from a net loss of $0.04 per share to a profit of $0.09 per share. It had previously guided for a net loss of $0.13 per share to a profit of $0.04 per share.
Granted, this is better news than before. And I can see how some investors would grab on to any shred of good news from the retail niche targeting older female customers -- similar stocks that have been struggling to turn around, include Chico's
Still, Coldwater Creek strikes me as a company paddling through some dangerous waters. The current economic difficulties are likely making mature female shoppers very value-oriented and discerning. Even before the economy worsened, these retailers were already struggling with offering the right merchandise mix at the right price.
Meanwhile, there are lots of retail bargain stocks these days. American Eagle Outfitters
Coldwater Creek and its peers still strike me as a bit risky, and "better than previously expected" isn't really enough to compel me at the moment, especially given the possibility that the retailer still won't be profitable this year. I'll keep my eye on these retailers with great curiosity as they try to turn around their businesses, but I think investors ought to choose their retail bargain stocks very carefully.
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