New York—Caché swung into a widened third quarter loss on Tuesday as its sales declined and it had an increased tax-related cost.
For the quarter ended Sept. 29, the women’s specialty retailer reported a loss of $6.4 million, or 49 cents a share, compared with a loss of $1.8 million, or 14 cents a share, a year earlier. The quarter included a per-share charge of 10 cents related to an increase in tax valuation allowance. Caché estimates a per-share loss of 39 cents to 41 cents last month.
Net sales declined 5.9% to $45.8 million compared with $48.7 million in the third quarter 2011. Comparable store sales declined 2.9%, following a 5.7% comparable store sales increase in the same quarter 2011.
Gross margin narrowed to 32% from 40.6%, as input costs rose 7.7%.
“Third quarter results were negatively affected by an unfavorable response to our summer and fall sportswear assortments, as well as an increase in the valuation allowance of $1.3 million against net deferred tax assets,” said Thomas Reinckens, chairman and chief executive.
He noted that the company has reworked assortments but continues to “maximize strong selling categories such as dresses and generate solid increases in our e-commerce sales.”
For its fourth quarter, Caché forecast earnings between 1 cent to 3 cents a share. Analysts’ average estimate expects 3 cents a share.
Reinckens added that the search is underway to find a new president and that the store is on track to achieve its targeted $3 million in savings for fiscal 2013.