On Jan. 15, Body Central Corp (NASDAQ:BODY), a specialty apparel retailer catering to young women,  announced 4^th quarter 2012 sales results and issued another downward revision in guidance. Net revenue increased a microscopic 0.4% with comparable sales (stores open longer than a year) declining 12%. Full year EPS guidance now hovers in the $0.68 to $0.70 per share range representing a 44% to 43% decline from the $1.22 reported in 2011. Body Central’s stock declined 65% since the beginning of 2012 (see chart below) and currently trades with a P/E of roughly 9. With that said, Body Central is a value trap to be avoided.

data by YCharts

Riding the roller coaster

After ending 2011 on a high note, Body Central began 2012 with insiders dumping the stock on a regular basis. Two of its largest shareholders, Beth Angelo and Jerrold Rosenbaum, sold stock just a couple of days before the 1^st Quarter 2012 announcement in May.

The 1^st quarter 2012 numbers gave indication to the start of a downtrend; revenue and net income increased 12% and 9% respectively with a comparable stores sales decrease of 1.4%. The then CEO Allen Weinstein cautioned investors about sales weakness and slow moving merchandise.

Fundamentals degraded further in the 2^nd quarter of 2012 with net income declining 36%. Same stores sales slid 5% versus the same time the previous year.

Management turnover increased as heads rolled due to slow moving merchandise. On Aug. 17 Allen Weinstein stepped down as CEO. Chief financial officer, Thomas Stoltz took over as interim CEO and chief of operations. With evident problems in inventory markdowns the company embarked on a search for a merchandising executive to assist the chief merchandising officer, Beth Angelo. The board of directors also named Robert Glass, an individual with retail experience, to its board of directors.

The need for executives with merchandising and retail experience highlights the lack of talent necessary to move things forward. Also, can a financial officer such as Thomas Stoltz effectively lead the company for any length of time?

In September, false hope set in. Insiders began buying and an analyst at Oppenheimer chimed in with an upgrade. The stock price increased 20%+ in September topping out at around $11.50 per share. Back to school hopes also stirred positive feelings in the stock market.

In November, another bad earnings announcement caused the stock price to do an about face. Same stores sales clocked in at negative 12%. Troubles with its merchandise offering resulted in high levels of markdowns hammering in stone Body Central’s inability to sell desirable products.