Foothill Ranch-based mall retailer Wet Seal Inc. may have more work cut out for it in its turnaround efforts, an analyst said Wednesday.
Piper Jaffray & Co.’s Jeff Klinefelter cut his rating on the stock of the teen clothing retailer to “neutral” from “overweight,” suggesting his clients no longer add Wet Seal shares.
The company’s stock closed down 6% on a market value of $335 million.
After a survey of teen shoppers, “We are less confident in the company’s ability” to post gains from a year ago, Klinefelter said.
Wet Seal, which runs stores for teen girls and young women, has seen “mindshare slippage” among shoppers, the analyst said.
The retailer may have to up marketing spending to lure customers, which could dent near-term profit gains, Klinefelter said.
The analyst said he expects profits for the 12 months through January of $23.8 million, down from an earlier forecast of $25.7 million.
Analysts on average expect a yearly profit of $20 million, down about 40% from a year earlier.
The company runs 415 Wet Seal stores selling clothes for teen girls and 81 Arden B. clothing stores for young women.
