Foothill Ranch-based mall retailer Wet Seal Inc. saw sales at stores open at least a year miss Wall Street’s expectation and lowered its outlook for the second time for the quarter through October.
Wet Seal’s same-store sales fell 5.4% in October, a steeper drop than the 2.1% decline analysts had expected.
Total sales, including at stores open less than a year, rose 4% to $41.5 million.
Wet Seal runs 490 clothing stores for teen girls and young women.
For November, Wet Seal said it expects a same-store sales decline in “low to mid-single digits if business conditions remain consistent with today.”
Wet Seal said it has been cutting prices on unsold clothes in its stores to get ready for the holidays. As a result, it lowered its profit outlook for the quarter through October, the second time it’s done so in the past five weeks.
The company now expects a quarterly loss of $3.7 million to $4.7 million. Wall Street had been expecting a profit of about $935,000.
On Oct. 3, Wet Seal cut its profit outlook and braced investors for a break-even quarter or a profit of up to $1.8 million.
The results mark a tough start for Chief Executive Edmond Thomas, a former executive at Irvine’s Tilly’s Inc. He took over in early October from Joel Waller, who spent the past two and a half years reworking the company.
The company’s troubles started in the late 1990s, when its styles fell out of favor with teen fashionistas. Many expected Wet Seal to file bankruptcy, which it avoided.
With the help of turnaround consultant Michael Gold, Waller closed unprofitable stores, switched up management and cut costs.
Now Wet Seal needs an executive to drive growth, including opening stores, according to analysts.
