Pacific Sunwear of California Inc. shares fell sharply Friday after weak sales in December led the company to issue a disappointing forecast for its fiscal fourth quarter.
The teen clothing retailer said late Thursday that holiday sales got off to a strong start in November, but over the first three weeks of December fewer people came to its stores. Pacific Sunwear said its business picked up in the days before Christmas.
It said that it expects a loss of 18 to 21 cents per share from continuing operations with revenue will be between $211 million to $214 million for the quarter than runs through January. That's down from $228 million a year ago. Analysts had been forecasting a loss of 14 cents per share and $219.7 million in revenue, according to FactSet.
Janney Capital Markets analyst Adrienne Tennant downgraded her rating on the retailer's stock to "Neutral" from "Buy" saying that touch macro-economic conditions will delay any further improvements to its business by several quarters. She also said in a research note that retailer's heavy emphasis on promotions and sales put pressure on its gross margin.
Shares of Anaheim, Calif.-based Pacific Sunwear fell 53 cents, or 15.5 percent to $2.90 by midafternoon trading Friday. Its stock price was up more than 80 percent for the past 12 months as of Thursday's close.