The young women’s specialty retailer now expects a net loss in the range of 10 cents to 12 cents a share and comparable store sales to rise in the low-single digits. Previously, the company had forecast comparable store sales to increase in the mid-single digits with a net loss in a range of 2 to 3 cents a share.
Comp Sales to Rise ‘Low Single Digits’
Analysts’ average estimate expects Wet Seal to report a loss of 2 cents a share. Shares of Wet Seal fell 10% in aftermarket trading hours on Tuesday after the forecast.
“Following our strong start to the quarter, mall traffic softened considerably during September and has continued into October, resulting in an increasingly promotional competitive environment in recent weeks,” said CEO John Goodman. “We expect to deliver improvement in most key financial metrics versus the year ago period, but the need to implement more extensive promotions than planned has caused us to lower our margin and earnings expectations for the quarter.”
Goodman added that the positive comp store sales and substantial improvement in merchandise margin compared to last year showed improvement.
“To that end, we are seeing a positive response to our marketing initiatives and other customer engagement strategies. When the Wet Seal girl is in the mall, we’re capturing her attention,” Goodman said.
Wet Seal is scheduled to reports its third quarter earnings on Nov. 25.