Foothill Ranch-based retailer Wet Seal Inc. saw its shares rise as much as 15% Friday before closing up about 5%, a day after the retailer beat expectations for the recently ended quarter and upped its profit outlook for the current one.
Wet Seal has a market value of $420 million.
Investors seemed to set aside the company’s cautious sales outlook for the current quarter amid a tough time for retailers.
Wet Seal forecast sales of $149.3 million to $151.6 million for the current quarter, lower than what Wall Street had been expecting at $153.3 million.
The company said sales at Wet Seal stores open at least a year,a key measure known as same-store sales,are projected to fall 2% to 4% amid the ongoing retail slowdown.
Investors instead seemed to latch onto Wet Seal’s strong profit performance and outlook, driving by cost cutting.
For the three months through May 3, Wet Seal reported a profit $8.9 million, up 17% from a year earlier.
Analysts on average expected a profit of $6.6 million.
Better efficiency and lower costs drove the profit gain, Chief Executive Ed Thomas said.
“We were pleased with the progress we made,” he said.
Quarterly sales were up 3% from a year earlier to $142.4 million. Wall Street was expecting sales of $141.9 million.
For the three months through July 3, Wet Seal projected a profit of $7.8 million to $9.7 million.
Analysts had been expecting a profit of $6.8 million for the current quarter.
Wet Seal runs 496 stores that sell clothes for teen girls and young women.
For the past year or so, the company has been going through a turnaround as heady sales gains earlier this decade faded.
Thomas, a former executive with Irvine-based retailer Tilly’s Inc. who worked at Wet Seal earlier in his career, has been focused on cutting costs since joining last year.
