Foothill Ranch-based Wet Seal Inc. swung to an operating profit in the fourth quarter, but the company’s shares fell sharply after its earnings release as the teen retailer gave a lukewarm sales forecast.
The teen retailer reported a profit of $684,000 for the three months ended Jan. 28. A year earlier Wet Seal posted a loss of $46 million.
Wet Seal’s net loss was $2.8 million in the period. That included $6.8 million in charges for stock compensation.
Shares of Wet Seal were down 8% in afterhours trading to $5.51.
Sales in the quarter rose 19% to $141 million. Sales at stores open at least a year grew 45% in the period.
“Our primary goal in fiscal 2006 is to make further improvements in operating income rates, and we now have ample evidence that we are in a position to begin to open new locations to drive growth in sales and profits,” said Chief Executive Joel Waller, in a statement.
Wet Seal expects to open 20 to 25 new stores during the year.
The company projected a mid-single digit percentage gain in same-store sales in the next few years.
In the past year Wet Seal has posted monthly same-store sales gains of 40% or more. It shuttered more than 100 unprofitable stores in its turnaround bid.
