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Why Cache's (CACH) Stock Plummeted Today

NEW YORK (TheStreet) -- Shares of Cache Inc. (CACH) plummeted 13.28% to $3.33 Tuesday after failing to meet earnings expectations and posting larger losses than analysts had forecast.

Net sales for the women sportswear company in the fiscal 2013 fourth quarter were $55.8 million, down from the $60.8 million it posted in the fiscal 2012 fourth quarter. Comparable store sales were down 5.9% according to the SEC Form 8-K the company filed Tuesday morning.

The adjusted net loss was $3.8 million, or 17 cents a share. Analysts had forecast a loss of 8 cents.

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TheStreet Ratings team rates CACHE INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate CACHE INC (CACH) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 25.4% when compared to the same quarter one year ago, falling from -$6.38 million to -$8.00 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, CACHE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CACHE INC is currently lower than what is desirable, coming in at 33.49%. Regardless of CACH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CACH's net profit margin of -16.93% significantly underperformed when compared to the industry average.
  • Net operating cash flow has decreased to -$6.48 million or 11.23% when compared to the same quarter last year. Despite a decrease in cash flow of 11.23%, CACHE INC is in line with the industry average cash flow growth rate of -18.94%.
  • CACHE INC has improved earnings per share by 22.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CACHE INC swung to a loss, reporting -$0.91 versus $0.17 in the prior year. For the next year, the market is expecting a contraction of 11.0% in earnings (-$1.01 versus -$0.91).
  • You can view the full analysis from the report here: CACH Ratings Report
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