Wet Seal Q3 Loss in Line, But Q4 View Weak

Wet Seal

Wet Seal

Foothill Ranch, CA—Wet Seal Inc. reported last week a third quarter loss that was in line with estimates but faced lower revenue and expects a fourth quarter loss as well.

For the quarter ended Nov.2, the teen specialty retailer posted a loss of $14.9 million, or 18 cents a share, compared with a loss of $14.8 million , or 17 cents a share, last year. On an adjusted basis, the loss came to 12 cents per share, matching analysts’ expectations.

Revenue fell 5.8% percent, to $127.7 million from $135.5 million, missing analysts’ estimate for $130.8 million. Comparable store sales remained basically flat as a 5% gain in transactions per store was offset by a decline of 5% in units per transaction.

‘Cautious Outlook’

Best performing categories included accessories, footwear, dresses and sweaters.

By division, net sales at Wet Seal Stores declined 2.6% to $114.9 million while comp store sales gained 1.7% due to higher transactions and higher unit per transactions.

At Arden B, net sales declined 27.5% to $16.7 million as comp sales were down 6.7%.

Gross profit increased 11% to $28.9 million while gross margin widened to 22.7% from 19.2% a year ago. Operating loss stood at $9.8 million f narrowed from an operating loss of $16.2 million in the prior-year quarter due to lower selling, general and administrative expenses.

“We’ve had a challenging start to the season, reflecting the difficult macro environment and ongoing softness in mall traffic, which is causing us to maintain a cautious outlook for the remainder of the year,” said CEO John Goodman.

Looking ahead, Wet Seal expects a loss of 14 to 17 cents a share for the fourth quarter on revenue between $134 million to $137 million. Analysts were anticipating earnings of a 1 cent a share on revenue of $154.5 million.

 

 

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Jeff Prine

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