Friday, March 7, 2008

Coldwater Creek in Hot Water!

Coldwater Creek took a nose dive into a bottomless pit of s.... yesterday as the stock plummeted by 19.8% to $4.05. During the day, the stock fell as low as 24% or $3.84 in one of largest declines for retail that we saw. Coldwater Creek was not alone in its misery; JC Penny took a huge dip of 11.1% to $42.77 as well as Chicos, whose stock dropped by 11% to $7.56 - but why the sudden panic? Is it all from the same store sales performance?

We all know their numbers were very bad: In the fourth quarter, Coldwater Creek reported a loss of $17 million which compares with a profit of $15.9 million a year prior. Sales also declined 6%. The most alarming figure came when the same store sales were announced equaling a drop of 19.2% which was quite comparable to the losses posted by Chicos. Coldwater Creek said their losses were caused by a decrease in store traffic and aggressive clearance tactics. Fashiontary thinks ridding of poor performing inventory is not always a bad thing – you need to the hit at some point but is the next step for them, closing stores?

Yesterday was a very sad day for Coldwater Creek and hopefully, they can move past this rough patch. Analysts seem to agree there is trouble moving the stock from "buy" to "hold". We believe in them!

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