Wet Seal Outlook Lags Expectations; CEO Says Chain ‘Stabilizing’Thursday, March 21, 2013
Foothill Ranch teen and contemporary retailer provided an outlook for the current quarter that’s below consensus estimates as its chief executive reiterated its focus on fast fashion as a key to growth plans.
“During the past two months, our team has moved quickly to begin stabilizing the business, get back to Wet Seal’s fast fashion roots and prepare for growth,” said Chief Executive John Goodman in a statement.
Wet Seal operates 468 Wet Seal stores for teens and 62 Arden B stores for young women.
Goodman joined the company in January, filling a spot that had been vacant since the firing of former Chief Executive Susan McGalla in July.
The company has been trying for a turnaround for several years, with different strategies at times. The most recent is a focus on fast-fashion merchandising.
The majority of the spending this year will be for store remodels, with 19 new Wet Seal stores planned for mostly outlet centers.
Wet Seal said it expects a loss of $2.7 million to $5.3 million for the quarter ending in April.
Wall Street analysts on average expected a profit of $1.8 million.
The company expects net sales for the April quarter to be between $135 million to $139 million, below the consensus estimate of $143.1 million.
Same-store sales for the April quarter are expected to be down in the mid-single digits.
The outlook follows the retailer’s fourth-quarter and full-year results, ended Feb. 2.
The company saw a loss of $85.8 million for the February quarter. It posted an adjusted net loss, excluding charges, of $4.8 million.
Analysts on average expected a loss of $5.3 million for the February quarter.
Wet Seal saw net sales down less than 1% to $161.7 million in the February quarter, beating the consensus estimate of $160.9 million.
Same-store sales for the recently ended quarter fell 8.3%.
Net sales for the full year fell 6.4% to $580.4 million.
The company saw a net loss of $113.2 million for the year or an adjusted loss of $19 million.
Shares were up about 2% in midday trading Friday to a market value of $277.79 million.