Demandware tumbles after major customer scraps website

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Demandware (DWRE) is sinking after the company disclosed in an SEC filing that Finish Line (FINL), which had begun using a new website designed by Demandware, had decided to revert back to its old website. Finish Line's customers were less satisfied with the new website than had been expected, Demandware explained. Meanwhile, Demandware provided fourth quarter revenue guidance of $23.5M-$24.5M, versus the consensus estimate of $23.06M. For all of 2012, Demandware provided revenue guidance of $76.5M-$77.5M, versus the consensus estimate of $76.21M. In a note to investors earlier today, Deutsche Bank analyst Tom Ernst, Jr. wrote that Finish Line's new website had been launched just one week before Black Friday. If the companies had had at least a month to make adjustments to the new site before the holiday shopping season started, the retailer wouldn't have gone back to using its old site, Enrst contended. Finish Line, which signed a long-term contract with Demandware, is likely to relaunch the new site in a few months, added the analyst, who maintained a Buy rating on the shares. In mid-afternoon trading, Demandware slumped $2.81, or 10.23%, to $24.67.

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