Teen apparel retailer Tilly's Inc (TLYS.N) forecast a much lower-than-expected profit for the fourth quarter, citing weak customer traffic amid increased promotions in the holiday season.
Shares of the company, which also reported lower-than-expected quarterly revenue, fell 20 percent in trading after the bell on Tuesday.
Retailers ranging from department store operator Macy's Inc (M.N) to apparel retailers such as Urban Outfitters (URBN.O) are offering huge discounts to help shift stock during what is expected to be the toughest holiday shopping season since 2008.
Teen clothing sellers such as Abercrombie & Fitch Co (ANF.N) and Aeropostale Inc ARO.N are discounting the most, due in part to high unemployment rates among the young but also because teens are spending more on high-cost items such as mobile phones, gaming consoles and tablets.
Tilly's stores, most of which are located in California, New York and Florida, offer brands such as Levi's and Billabong among others and its own brands such as RSQ, Full Tilt and Blue Crown.
The company said it expects fourth-quarter earnings of 15 to 21 cents per share. Analysts' were expecting 35 cents, according to Thomson Reuters I/B/E/S.
The Irvine, California-based company said it expects comparable-stores sales to fall in the mid- to high-single digit percentage range.
Third-quarter net income fell 34 percent to $6.1 million, or 22 cents per share, from $9.3 million, or 33 cents per share, a year earlier.
Net sales fell 0.9 percent to $123.8 million, while comparable-store sales, which include online sales, fell 2.4 percent in the quarter.
Analysts on average had expected earnings of 21 cents per share on revenue of $132.6 million.
Tilly's sells surf and skateboard apparel, footwear, skateboards and accessories, and operated about 189 stores as of November 2.
Tilly's shares, up 17 percent in the past year, closed at $15.88 on the New York Stock Exchange on Tuesday.
(Reporting by Siddharth Cavale in Bangalore)