Foothill Ranch-based Wet Seal Inc., a teen retailer in the midst of a multiyear turnaround, delivered a mix of good and bad with its quarterly results on Monday.
The good: sales for the quarter ended April 29 rose 20% from a year earlier to $125 million. A $6.7 million operating loss a year earlier was replaced by a $4.5 million operating profit this time around.
“Our operation is running smoothly and we are continually finding ways to improve our efficiency and reduce costs,” Chief Executive Joel Waller said.
The bad news: big charges led to a widened quarterly net loss, and concerns about May sales.
Wet Seal posted a net loss of $13.7 million, up from $8.6 million a year ago. The loss was spurred by an $18 million charge for converting debt into stock, $5.6 million for stock compensation, and other charges.
The company also cautioned about how things are going in May.
Waller said he sees a decline in May same-store sales in the “high single digits.” He blamed it on a tough comparison with last year,when a rebounding Wet Seal was posting big gains,and a lack of shirts and dresses at stores.
“Although we identified the trends related to fashion tops and dresses, we did not have sufficient inventory of the fashion merchandise to meet the demand,” Waller said. “We expect to be fully stocked sometime in middle or late June.”
For the rest of the year, Wet Seal foresees monthly same-store sales gains in the mid-single digit range, he said.
Shares of Wet Seal were off about 8% in afterhours trading.
