Orange County Business Journal

Wet Seal Shares Fall on Slight Dip in September Sales

Kari Hamanaka Thursday, October 6, 2011

Shares of Foothill Ranch-based Wet Seal Inc. were down after the teen retailer reported disappointing September sales.

The mall retailer, which sells clothes and accessories for teens and young women, saw sales of stores open at least a year down less than 1% from a year earlier. It’s the first monthly sales decline for Wet Seal this year.

Analysts on average had expected same-store sales for the month to be up 3.8%.

Nationally, retailers saw September sales up about 5%. That’s better than the 4.6% gain analysts on average expected.

Wet Seal shares closed down 12.5% Thursday to a market value of about $367 million.

The company operates two clothing store chains totaling 545 stores with its Wet Seal division for teen girls accounting for 460.

A young women’s division, called Arden B., makes up the rest of the company’s stores.

Wet Seal’s September sales remained flat after business slowed following the Labor Day weekend, when many retailers typically play up promotions in a last push to capture back-to-school sales.

September sales at Arden B. were down 2.2%. That’s an improvement from the 8.7% fall Arden B. reported in August.

Arden B. followed a similar trend seen at Wet Seal with sales slowing as the month progressed.

“As the retail environment remains challenging and customer behavior difficult to predict, we continue to manage inventories conservatively and focus on better promotional planning to balance our priorities of sales growth and gross margin improvement,” Chief Executive Susan McGalla said in a release.

Wet Seal reiterated its profit guidance for the three months through October of $5.5 million to $6.6 million. The October same-store sales outlook has been lowered slightly to a gain in the mid-single digits, McGalla said.