Cache Cuts 4Q Outlook

Cache Inc. (CACH - Snapshot Report) recently trimmed its earnings outlook for the fourth quarter of 2011 following increased promotional activity for sweaters and outwear. For the fourth quarter of 2011, the company now expects earnings in the range of 16-18 cents per share, while the prior guidance was 24-30 cents. Although the company took selective pricing action in its fall offering, the hike was not of much help.

Diluted earnings per share for full fiscal 2011 are currently expected in the range of 17-19 cents. However, this was an improvement over the loss per share of 72 cents in the last fiscal. Cache has also initiated guidance for first-quarter 2012, with an earnings range of zero to 3 cents a share.

The Zacks Consensus Estimate for the fourth quarter of 2011 is now pegged at 18 cents while the estimate for first-quarter 2012 is 2 cents.

For the upcoming fourth quarter of 2011, the mall-based specialty retailer of sophisticated sportswear and social occasion dresses expects comparable store sales to increase 12%, in line with the company’s original outlook. For first quarter 2012, Cache expects comparable store sales (comps) to increase in the mid to high single-digit range. This compares with a 7.7% increase in comps in the first quarter of fiscal 2011.

On a positive note, the New-York based company will end the fiscal year profitably as opposed the prior year and will likely continue the trend, going forward. Cache’s comps started to rebound since September, a fact that management believes is indicative of the strength of the assortments.

Cache, which faces competition from Genesco Inc. (GCO - Snapshot Report) and Zumiez Inc. (ZUMZ - Analyst Report) expects to report its fourth quarter 2011 results on March 19, 2012.

Cache currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Neutral recommendation on the stock.    

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