As we head into Black Friday and the all important holiday shopping season, Cache, Inc. (NASDAQ: CACH), Body Central (NASDAQ: BODY) and bebe stores (NASDAQ: BEBE) have been this year’s worst performing retail apparel stocks –down 84.7%, 59.3% and 56.7% since the start of the year. Given that Black Friday and the holiday season can account for as much as 40% of a retailer's annual sales, its really a make or break time for these stocks to prove themselves to investors. However, predictions about this year’s holiday shopping season are mixed as market research company ShopperTrak predicts an overall year-over-year holiday shopping season increase of 3% (less than the 3.7% increase for last year 011) but the Deloitte consulting group is predicting a 3.5% to 4% increase. So why have retail apparel stocks Cache, Inc., Body Central and bebe stores performed so poorly for investors this year and is there still time to turn things around? Here is a closer look:
Cache, Inc. (NASDAQ: CACH) Needs a New Merchandise (And a New Chief Merchandising Officer)
Cache, Inc. is a nationwide, mall-based specialty retailer of lifestyle sportswear and dresses which has approximately 280 centrally located stores in upscale malls in 43 states, Puerto Rico and the US Virgin Islands. Cache, Inc. is down 60.9% since the start of the year and down 84.7% over the past five years. Cache, Inc. also tumbled back in October on preliminary earnings and when the complete earnings report came in earlier this month, it reported a net sales decrease of 5.9% to $45.8 million and a net loss of $6.4 million verses a net loss of $1.8 million. What’s more worrisome is that Cache, Inc.’s reported that results were negatively impacted by an unfavorable response to the company’s summer and fall sportswear assortments and probably by the fact that company has had to hire an executive search firm to help find a new president and chief merchandising officer. Until that position is filled (with someone who has an eye for fashion), investors might want to shy away from Cache, Inc. – unless they have personally visited its stores and find the winter or holiday collections to be appealing. On Monday, Cache, Inc. fell 3.59% to $2.42 (CACH has a 52 week trading range of $2.40 to $7.88 a share) for a market cap of $31.22 million.
Body Central (NASDAQ: BODY) Is Search for a New CEO
Body Central is a growing, multi-channel, specialty retailer offering on-trend, quality apparel and accessories at value prices to women in their late teens and twenties from diverse cultural backgrounds uder the Body Central and Body Shop banners and the Body Central catalog and e-commerce website. As of October 31, 2012, Body Central operated 267 specialty apparel stores in 24 states but the stock is down 59.3% since the start of the year and down 21.85% since late 2010 plus the stock has a trailing P/E of 10.68 and a forward P/E of 10.37. Investors should note that a number of law firms have announced “investigations” of Body Central for the losses it has racked up for investors. The problem for Body Central and for investors is that the company’s retiring CEO stated back in August that the “shortfall in our retail business was due not only to our own missteps but also to the challenging retail environment.” I am rather surprised by the frank admission but it seems like that has only encouraged the lawsuits to be filed. Body Central’s COO and CFO is also serving as the interim CEO until a full time replacement is found. And while the latest results were in line with expectations, Body Central has been effectively left without a head going into the most important sales period of the year. On Monday, Body Central rose 6.28% to $10.16 (BODY has a 52 week trading range of $7.71 to $30.93 a share) for a market cap of $165.68 million.
bebe stores (NASDAQ: BEBE) Swung to a Loss Last Quarter
bebe stores designs, develops and produces a distinctive line of contemporary women’s apparel and accessories, which it markets under the bebe, BEBE SPORT, bbsp and 2b bebe brand names and through 246 stores. These stores are located in the United States, US Virgin Islands, Puerto Rico, Canada and Japan plus bebe also distributes and sells bebe branded products through both its licensees in approximately 20 countries. bebe stores is down 56.7% since the start of the year and down 72.5% over the past five years but the company has recently approved a share repurchase program that will be worth up to $30 million. However, bebe stores has a trailing P/E of 45.12 and a forward P/E of 24.07 – meaning its not exactly a bargain for investors. In addition, bebe stores recently reported that revenue fell 7.3% to $117.1 million while net income of $2.4 million became a net loss of $2.6 million plus the company’s outlook for the current quarter is not so favorable. One bright spot could be the recent appointment of the Head of Business Development for Shopping at Google as the company’s new Chief Digital Officer as part of the company’s initiative to become one of the most digitally advanced fashion companies. On Monday, bebe stores rose 3.14% to $3.61 (BEBE has a 52 week trading range of $3.48 to $9.58 a share) for a market cap of $304.67 million.
The Bottom Line. Investors should probably hold off on retail apparel stocks Cache, Inc. and Body Central until they fill those key vacant positions while bebe stores is at least worth watching over the long-term.