NEW YORK (AP) — Shares of Coldwater Creek jumped last week after the clothing company announced a $65 million loan from a private equity firm.
THE SPARK: Golden Gate Capital is offering a lifeline to Coldwater Creek, which has struggled with soft consumer spending and some products that failed to inspire customers.
Golden Gate purchased Eddie Bauer in 2009 after it filed for bankruptcy protection. It is also part of a group that is buying Collective Brands Inc., which owns the shoe store chains Payless and Stride Rite, for more than $1.3 billion.
Golden Gate Capital will be able to name two members to the board at Coldwater, which also runs spas and is based in Sandpoint. Golden Gate appointed retail group operating partner Neale Attenborough to one of the posts and said it will name someone for the remaining position at a later date.
Coldwater Creek also maintained its forecast for a fiscal second-quarter loss of 15 to 20 cents per share. Analysts polled by FactSet expect a loss of 18 cents per share.
THE BIG PICTURE: All retailers are struggling with a dreadfully slow economic recovery. People are not spending like they once did with the jobs market still looking bad. Shoppers pulled back on spending in June, slowing sales for most retailers to the weakest pace since 2009. In May Coldwater Creek reported that its first-quarter loss narrowed and expressed optimism that its turnaround efforts might be taking hold. The company has closed stores, cut marketing expenses and reduced inventory as it tries to find clothing that people will be more willing to buy.
SHARE ACTION: Shares of Coldwater Creek Inc. gained 26 cents, or 50.8 percent, to 78 cents in morning trading. The shares were trading above $20 during the summer of 2007, before the recession hit. For the year to date, the stock has lost more than half of its value, closing at 52 cents on Monday.