On Friday, Cache Inc. said sales trends in the fourth quarter have been "difficult" and added it will lower its quarterly earnings forecast in January, sending shares down 8 percent to close at $9.92.

On Monday, Broadpoint Capital and C.L. King downgraded the company to "Neutral" from "Buy."

C.L. King analyst Mark Montagna said he expected the fourth-quarter expectations miss and expects full-year earnings will also come in below analyst expectations.

"In addition, we expect the mall traffic declines to persist through the first half of 2008," he wrote. "This is likely to cause markdowns and expense deleverage to substantially offset the very favorable benefits from direct-sourcing gains via its May 2007 acquisition of Adrienne Victoria Designs."

Cache completed the acquisition of its largest supplier, Adrienne Victoria Designs, in May for undisclosed terms.

Additionally, Montagna said the store will likely be hurt by its image of a high-priced retailer as consumers are being squeezed by credit problems and a housing slump.

"Management is trying to combat such a perception with its Cache Tee'z and a lower-priced pants line at $78 to $88," Montagna wrote. "While these two newer lines will likely help sales, they are not likely substantial enough to overcome weaker sales in much larger categories."

Meanwhile, Broadpoint Capital Inc. analyst Paula Kalandiak said she expects December sales at stores open at least one year, a key retail gauge of performance, to decline in December. She expects slower sales of products including the company's Contour line, introduced in the summer as a wear-to-work product-line extension.

"We believe that the momentum from the late-summer introduction of the Contour collection has slowed down," Kalandiak wrote. "In addition to the difficult macroeconomic environment, the company faces a difficult positive 10 percent comp in January."

Shares sank 58 cents, or 5.6 percent Monday, after earlier falling as low as $9.14, a 52-week low.

The stock has traded between $9.70 and $25.92 over the past 52 weeks.