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Why Body Central (BODY) Stock Is Plummeting

Stocks in this article: BODY

Updated from 9:02 a.m. to update share price and company description. 

NEW YORK (TheStreet) -- Body Central (BODY) shares are plummeting before the bell Wednesday after the company said it was growing more likely it would not be able to continue as a going concern after reporting negative results in its year-ending quarter.

Before market open, shares had plunged 27.2% to $1.18.

The retailer, known for its specialty apparel and accessories stores under the Body Central and Body Shop banners, said it had suffered losses and negative cash flows from operations which raise "substantial doubt" about its ability to continue as a going concern.

In the three months to December, the company reported revenue of $66.2 million, a 18.3% year-over-year decrease, while comparable-store sales decreased 26%, its eighth consecutive quarterly drop.

On an adjusted basis, the Jacksonville, Florida-based company recorded a net loss of 74 cents a share, compared to profits of 15 cents a share in the year-ago quarter.

"These results have had a negative impact on our liquidity. As a result, we have taken several actions to increase our liquidity which we believe should be adequate to finance our working capital needs through 2014, if we are successful in executing our business plan," the company said in a statement.

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Body Central said it has approximately $20.1 million in cash, including $12 million in a term loan under its asset-based loan facility, and an additional $5 million in its undrawn revolving loan facility. The company said to improve liquidity it plans to expand its credit facility and engage in cost-cutting measures such as a reduction of its workforce.

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

"We rate BODY CENTRAL CORP (BODY) a SELL. This is driven by some concerns, 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow."

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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