(Recasts; updates share movement)
Nov 4 (Reuters) - At least one brokerage downgraded Coldwater Creek Inc CWTR.O and two others cut their price target on its stock after the women‘s-apparel retailer forecast a third-quarter loss and withdrew its fourth-quarter outlook, sending its shares down as much as 17 percent. [ID:nBNG43969]
“In light of the poor results we do not see a catalyst on the horizon. The improved merchandise and operational execution was offset too strongly by such a weak consumer environment,” CL King & Associates analyst Mark Montagna wrote in a note to clients.
He downgraded the stock to “neutral” from “strong buy.”
An increasing number of U.S. retailers are feeling the pinch of the ongoing financial crisis and deepening credit crunch, which has soured consumer confidence, keeping more of them away from buying non-essentials.
“We believe it is best to stay on the sidelines until the company posts actual results that prove an earnings recovery has begun,” Montagna said.
Barclays Capital analyst Jeff Black said “the miss underscores our theme that investors should be cautious toward retailers that have been making estimates on lower inventory and expenses.”
Coldwater, which caters to women between the ages of 35 and 60, is the first of those stories to lose steam and the other companies that could see earnings revisions in coming months as sales slump against tough compares are Gap Inc (GPS.N) and Limited Brands Inc LTD.N, Black said.
The main laterals in terms of weaker sales trends include Chico’s FAS Inc (CHS.N) and AnnTaylor Stores Corp ANN.N, though both have room to reduce expenses into 2009, he added.
Black cut his price target to $4 from $7 on the stock, but maintained his “equal weight” rating.
Thomas Weisel Partners cut its price target by $2 to $4 on Coldwater. It has a “market weight” rating on the stock.
Shares of Coldwater were down 54 cents at $2.87 in morning trade on Nasdaq. They fell to a low of $2.82 earlier. (Reporting by Dilipp S. Nag in Bangalore; Editing by Anil D‘Silva, Himani Sarkar)