tumbled Tuesday after the retailer slashed its earnings forecast amid a drop in sales.
The stock was sliding $1.64, or 10%, to $14.60 in recent trading.
Cache, an operator of mall-based women's clothing chains, said Tuesday that it expects second-quarter earnings of 6 cents to 8 cents a share. That's down sharply from its prior forecast of 20 cents to 24 cents a share, and it's also below the 10 cents a share the company earned a year ago.
Analysts polled by Thomson Financial projected earnings of 20 cents a share.
The guidance cut came after a 2% drop in May same-store sales, or sales at stores open at least a year. Total sales for the four weeks ended May 26 fell 3.5% to $21.9 million.
"We are disappointed in our May sales results, which reflected continued softness in our spring/summer knit top assortments partially offset by strength in dresses," Brian Woolf, chairman and CEO, said in a statement. "We are currently taking the markdowns necessary to end the quarter in a healthy inventory position and are re-balancing our assortments to be in a better position for the fall/holiday season. Based on this, we have reduced expectations for the second quarter and full fiscal year."
Elizabeth Pierce, an analyst with Roth Capital Partners, downgraded Cache's stock to hold from buy after the news.
"The company continues to struggle with merchandise issues, especially in the tops category, and we do not expect the situation to improve until
the fourth quarter," Pierce wrote. "Moreover, we believe marketing expenses will continue to pressure results, especially as the top line remains under pressure, prohibiting the company from leveraging the increase in costs, and thus leading to lowering earnings."
Cache's new guidance assumes same-store sales, or comps, will be flat to down slightly for the second quarter and will decline by 2% for the third. The company said it expects comps to be flat to up in the low-single-digit range during the fourth quarter, as efforts to improve assortments take hold.
For the full year, Cache lowered its earnings forecast to a range of 47 cents to 49 cents a share, down from its earlier projection of 75 cents to 80 cents a share.
Wall Street expects earnings of 78 cents a share for the year. The company earned 51 cents a share in fiscal 2006.
Cache now sees full-year sales of $267 million to $273 million. That forecast compares with sales of $279 million last year and an earlier guidance of $284 million to $294 million.