Orange County Business Journal

Wet Seal Ups Profit Outlook for Recently Ended Quarter

Kari Hamanaka Thursday, August 4, 2011

Foothill Ranch-based Wet Seal Inc. adjusted its profit outlook upwards for its July quarter as monthly sales continue to improve for the mall retailer.

Wet Seal said it expects its profit for the recently ended quarter to come in at $2 million. Excluding charges, it said profit could be between $2 million to $3 million.

The adjusted outlook is on the high end of the $1 million to $2 million projection the company gave in May.

It’s also on par with the $2 million Wall Street analysts on average expect for the three months through July.

Wet Seal operates 542 stores under two divisions.

The company's Wet Seal division for teens accounts for 460 of those stores.

The Arden B. chain, geared toward young women, makes up the rest of the company's stores.

Wet Seal reported a 7.4% increase in sales at its stores open at least a year in July.

Analysts on average had expected July same-store sales to rise 3.3%.

“We are encouraged by our July sales results as we begin the back-to-school season,” said Wet Seal Chief Executive Susan McGalla.

The same-store sales increase was led by a 7.8% sales gain at Wet Seal, where accessories led the charge.

Arden B. sales were up 5%, led by its dress category.

Concerns about unemployment and the general economy persist for some analysts who question whether heavy promotions will hurt the retailers' earnings.

Wet Seal's shares were down 3% in New York midday trading.

The company has been reworking its online store to offer more full-price clothing while cutting back on discounts.

The company said those changes were a factor in a drop of 17% in online sales last month.

The company is expected to report results for the three months through July on Aug. 18.