Wall Street and Main Street are often a volatile mixture, as Plymouth-based retailer Christopher & Banks Corp. recently discovered.

Shares soared 27 percent on Dec. 11 after the women's specialty retailer said it was expecting solid profits in the third quarter. But by Jan. 7, after those earnings came in at the low end of its range, Christopher & Banks took a 13 percent hit, one the day's biggest drops.

Analysts remain split on prospects for the 806-store chain, which built a name selling snowman sweaters. In the past six months, shares have recovered from March lows of about $3.50 and have been trading in the $6 to $8 range. The stock closed at $6.65 Friday, up 12 cents.

The company operates 540 Christopher & Banks stores and another 256 CJ Banks in 46 states. The vast majority are mall-based stores, and about 55 percent are clustered in the Great Lakes states and Iowa.

About half of the stores are in isolated markets, such as Billings, Mont., or small- and medium-size markets, which have different fashion preferences than urban markets. Grass-roots promotions such as "Girls Night Out" and fashion shows where customers model the clothes have played well, said CEO Lorna Nagler, a Wisconsin native who took the helm in August 2008.

After a year of retrenching and investing in more sophisticated customer management technology, Christopher & Banks is on firmer footing, some analysts say.

Nagler has realigned the company to pull its namesake Christopher & Banks stores and its plus-size brand, CJ Banks, out of their balance-sheet silos and under a single division. It's a move that has cut costs, improved operating efficiencies and raised margins.

Nagler also pulled the two names under the same roof by carving out a CJ Banks store-within-a-store in about 30 Christopher & Banks locations. In a bolder move, the company opened its first "dual-store" concept last July in Moosic, Pa., with framed mirrors and armoires, to showcase both brands.

The idea with both efforts is to make it easy for shoppers to find a top in one brand and a bottom another. It's also a way to work out the kinks and support Nagler's belief that the store of the future will carry a range of sizes, from petites to pluses, while still keeping the Christopher & Banks and CJ Banks names strong.

"We're following what the customer is asking for," Nagler said in an interview last week. "It's like the yellow brick road."

Analyst Margaret Whitfield of Sterne Agee is upbeat about Christopher & Banks' prospects, and she believes its stock could reach $10 this year.

"Everything has changed," Whitfield said. "Their sourcing, their thoughts on real estate, their systems. They had limited infrastructure a few years ago, and they've been hard at work under both Lorna Nagler and her predecessor, Matt Dillon. They've made good progress."

Among the seven analysts who follow the company, two recommend selling the shares, one has a buy recommendation and four recommending holding the stock.

Niche player

For the spring assortment of 2009, Whitfield thought "the clothes looked very basic, unappealing." But she said the company's investment in new planning and allocation systems are helping it add more novelty into the mix, and to figure out which markets want more Christmas sweaters and which ones prefer tailored blouses.

It can be an advantage to be a niche player in secondary markets, Whitfield said, and Christopher & Banks doesn't face much competition.

"There are very few retailers in this space," she said. "If the ladies aren't shopping at Christopher & Banks, they might be at a Kohl's or a J.C. Penney."

In the spring, the retailer will launch a loyalty program, a proven tactic that rewards a retailer's best customers, drives traffic and gets customers emotionally attached to brands. All stores will carry jewelry for the first time, too.

The retailer's core customer is the middle-income baby boomer, who puts a premium on comfort and value-priced clothes. They pulled back spending more than any other demographic group during the recession, and Christopher & Banks felt it.

Last year, sales were down about 8 percent to $530 million compared with the previous year. Same-store sales have declined or been flat in eight consecutive quarters.

There are signs of improvement. The company has slashed inventory by 20 percent or more this year, and was able to grow third-quarter operating income to $9.8 million from $700,000 a year ago.

With $100 million in cash and investments and zero bank debt, Nagler says she can afford to be prudent in the short term and focus on long-term growth opportunities.

J.P. Morgan lauded the retailer's lean inventory positions and streamlined business structure in a Jan. 13 report, saying the changes will continue to improve the retailer's gross margin. But the investment firm gave only lukewarm marks to Christopher & Banks for "lack of top-line momentum."

Nagler said intensive customer research will translate into sales, as will the blending of plus- and missy-size brands.

Through in-store "fit clinics" as well as formal and informal surveys, the retailer learned that aging boomers want longer sleeves. Or sometimes wear shirts as jackets, and want a more tailored look. And that they hate stretchable clothing.

"We are finding our voice," she said.

While other retailers are turning their sights to younger shoppers, Nagler will stick with boomers, who still make up 40 percent of apparel sales.

"We like who our lady is," she said. "We think she is being a little bit forgotten by other retailers."

Jackie Crosby • 612-673-7335