Cache Guidance Lowered

Cache, Inc. (CACH - Snapshot Report) is a specialty retailer, which operates stores selling women's apparel and accessories under the names Cache and Cache Luxe. Cache targets women between the ages 25 and 45. Cache Luxe is the company's newest store concept that was rolled out to replace the Lillie Store concept. The company recently decided to close its Lillie Rubin stores by the end of the third quarter.

On September 22, Cache lowered its guidance for the third quarter and full-year 2008, citing tough economic conditions. Specifically, management now expects fiscal 2008 sales of $278-$280 million and continuing EPS is expected to range from $0.24 to $0.31. This is down from its previous guidance of $286-$290 million in sales and continuing EPS of $0.53-$0.56. We lowered our estimates for 2008 and 2009, accordingly.

The stock is now down about 50% since our downgrade on June 9. Admittedly, we are surprised at how far CACH shares have declined in price, especially in the last few days. Given the difficult environment for retailers, we are hard-pressed to find reasons to step up and buy CACH shares here. We maintain our Hold rating.

Read the full analyst report on CACH