Wet Seal Q3 Loss in Line, But Q4 View Weak

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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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