Retailers, restaurants take hits with release of earnings news.

IT hasn't been a good couple of weeks for several local retail and apparel companies, as jittery investors pounced on disappointing news in third-quarter earnings reports and hammered their stocks.

L.A.-based Tarrant Apparel Group cut its full-year outlook, and its shares dived nearly 39 percent. Manhattan Beach-based footwear maker Skeehers USA Inc. was dinged 22 percent after announcing lower fourth-quarter guidance. Westlake Village-based musical instrument retailer Guitar Center Inc. saw its shares fall 17 percent after missing analyst estimates by a penny.

With the exception of Tarrant, stocks rebounded following the short-lived plunge, although they still were off from pre-earnings report levels. Skechers hit a low of S12 a share on Oct. 27, but climbed back to S13 the next day. The stock was trading as high as $16.25 on Oct. 26.

Richard Giss, a partner at Deloitte & Touche LLP's Los Angeles office, called the share movement a reflex reaction. "The market is really quick to punish." he said. "'Growth and revenue is so important in the evaluations of these companies."

He added that investor concerns go beyond company fundamentals. Among the worries: The Conference Board's consumer confidence index hitting a two-year low. still-high gas prices and mounting fears that real estate prices will fall. "'People feel a little less confident," Giss said.

In its report, Skechers warned that it expects fourth-quarter earnings of 2 cents to 7 cents per share, below analyst estimates of 6 cents per share. The company said that historically its first three quarters are stronger than its fourth. (For the third quarter, the company met analysts' estimates.)

Despite the lowered fourth-quarter guidance, Vera Van Ert, an analyst with Wedbush Securities Inc., retained a "buy" rating for Skechers. In a research note, she said that the company saw solid retail and wholesale sales growth in the third quarter.

"The company continues to see strength from its Skechers men's, women's and children's lines and its new fashion brands," she said.

Similarly, analysts maintained that Guitar Center's principal sales vehicles--its stores--remained healthy, even if its third-quarter per-share results missed estimates by a penny. Revenues came in nearly 2 percent under analyst estimates.

Guitar Center's third-quarter weakness was blamed on the company's Musician's Friend direct response music unit, which showed a slight dip in gross margins. The company attributed the dip to reduced shipping and handling revenue as a result of growing competition.

Still, Mitchell Kaiser, an analyst at Piper Jaffray & Co., kept an "outperform" rating for Guitar Center.

"We believe Guitar Center has buying efficiencies relative to its smaller competitors and can play the pricing/free shipping game longer than the competitors," he wrote in a research note.

Guitar Center shares were trading in the $50 range last week after hitting a recent low of $47.86 on Oct. 27. Shares had been trading as high as $62.45 on Oct. 25.

Tarrant's stock fell, the result of new denim brands flooding the market. Kmart Corp. discontinued one of its jeans brands, called Gear 7.

The company said it now expects full-year net income of $1 million to $2 million, down from an earlier forecast of $9 million to $12 million. On the news, Tarrant's shares fell to a low of 86 cents last Tuesday, down from $3.24 in early October.

Shares of Los Angeles-based restaurant chain California Pizza Kitchen Inc. saw limited disturbance from earnings news. The company said it expects fourth-quarter net income of 30 cents to 31 cents per share, just under analyst projections. For the third-quarter, the company's net income rose to $5.5 million from $2.5 million in the like period a year ago.

RACHEL BROWN Staff Reporter