Coldwater Creek shares fall on weakened outlook

NEW YORK (AP) -- Shares of Coldwater Creek Inc. tumbled 20 percent Tuesday after the struggling women's clothing and accessories company said that its fiscal fourth quarter loss would be larger than it previously expected.

THE SPARK: Coldwater said it now expects to post a loss of between 70 cents and 80 cents per share. It previously said it expected a loss of between 55 cents and 65 cents per share.

Analysts, on average, expect a loss of 68 cents per share for the period, according to FactSet.

THE BIG PICTURE: The Sandpoint, Idaho-based company said it now expects its revenue at premium stores open at least a year to be essentially flat compared with the prior-year period. The metric is a key measure of a retailer's health, because it excludes revenue at stores that recently opened or closed.

Coldwater said it experienced strong sales during peak holiday selling periods, but its holiday results were hurt by weak store traffic in both early November and early December. As a result, the company said it had to cut prices more than expected in order to manage its inventories, lowering its profitability.

The company plans to report its results for the fourth quarter and fiscal 2012 on March 13.

THE ANALYSIS: UBS analyst Roxanne Meyer noted that 2012 will mark the company's sixth-straight year of negative earnings and there currently isn't much information out there as to when the company could return to profitability. She backed her "Neutral" rating for Coldwater, but cut her price target by $1 to $5.

"We remain concerned about Coldwater's ability to generate sustainable positive traffic and comparable sales and meaningfully improve merchandise margins," Meyer wrote in a note to investors.

THE SHARES: Down $1.01, or 20.2 percent, to $3.99 in heavy midday trading, after falling as low as $3.68 earlier in the day. Over the past 52 weeks, the company's shares have traded between $1.80 and $5.85.

Coldwater shares rose about 2 percent in 2012.