Wet Seal Lowers Q3 Forecast on Weaker Traffic

Wet SealFoothills Ranch, CA—Citing the need for more promotions amid a competitive retail environment where traffic is down, Wet Seal Inc. lowered its third quarter earnings forecast on Tuesday.

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.

 

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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com

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