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Coldwater Creek shares fall on weak outlook

NEW YORK (AP) -- Coldwater Creek Inc. shares tumbled Thursday after the women's clothing and accessories retailer reported lower-than-expected first-quarter sales and issued a disappointing outlook for the current period.

THE SPARK: Excluding one-time items, Coldwater posted a loss of 66 cents per share, which was less than the loss of 77 cents per share analysts predicted by analysts polled by FactSet. Sales dropped 8 percent to $155.7 million, falling short of the average Wall Street estimate of $166.7 million.

Sales at its premium stores open at least a year — a key metric of a retailer's health — slid 10.5 percent during the quarter.

For the second quarter, Coldwater projected a loss of 55 cents to 75 cents per share. Analysts expect a loss of 55 cents per share.

THE BIG PICTURE: The Sandpoint, Idaho-based company has struggled in recent years amid changing fashion trends and weak consumer spending. It hasn't posted a quarterly profit since the second quarter of 2010.

Over the past three years, the shares have dropped about 82 percent. In the months since the company's October 4-for-1 reverse stock split, the shares have lost about 12 percent of their value.

President and CEO Jill Dean said Coldwater's first-quarter sales were hurt by unseasonable weather, but the company was able to more than offset the softer-than-expected sales by boosting profitability and managing expenses.

The company closed three locations during the quarter, ending the period with 347 premium stores, 37 factory stores and eight spas.

THE ANALYSIS: B. Riley analyst Jeff Van Sinderen downgraded Coldwater's stock to "Neutral" from "Buy," saying that despite the expense tightening and easy year-ago comparisons, the company's profits and sales aren't improving at the rate he expected.

Van Sinderen said that while he thinks there's value in Coldwater's brand and a chance to improve its retail sales, comparable sales — or sales in stores open at least a year — and profitability need to improve and the company may need to speed up its store closings in order to meet his profit targets.

The analyst also trimmed his price target on the stock to $3.50 from $4.

THE SHARES: Down 46 cents, or 13.4 percent, to $2.99 in midday trading, after dropping as low as $2.88 earlier in the day. Over the past 52 weeks, the stock has traded between $1.78 and $5.85.