The Wet Seal Inc. on Thursday posted a 92.6 percent drop in fourth-quarter income, impacted by a tax benefit a year ago.
For the three months ended Jan. 29, net income attributable to shareholders was $5.2 million, or 5 cents a diluted share, from $70.4 million, or 73 cents, in the 2009 quarter. Results for the year-ago quarter were boosted by a noncash income tax benefit of $64.8 million to reverse the company’s deferred tax valuation allowance.
Excluding the effects of charges related to its transition in chief executive officers and asset impairment, earnings per share in the most recent quarter would have been 7 cents a diluted share, 2 cents better than the analysts’ consensus estimate carried by Yahoo Finance.
Susan P. McGalla succeeded Ed Thomas as chief executive officer in January.
Sales rose 9.6 percent to $165.5 million from $151 million. Comparable-store sales rose 2.3 percent as Wet Seal’s comps were up 1.9 percent and Arden B’s up 4.8 percent. Gross margin was flat at 68.6 percent of sales in both periods.
McGalla said, “I am encouraged by the solid start to fiscal 2011 in February, in which we generated a high-single-digit comparable-store sales increase. We are comfortable with overall inventory levels and content at both divisions, which we hope will support continued strong sales growth through the first quarter.”
Consolidated comps in February rose 7 percent, the company reported earlier this month.
The ceo reported that e-commerce sales rose 33.9 percent, “with sales growth driven by increased inventory investments and higher marketing investments primarily focused on customer acquisitions.”
The company provided first-quarter earnings guidance of 5 cents to 7 cents a diluted share. The firm presumed sales of between $151 million and $155 million, and comps increasing in the mid- to high single digits.
For the year, income attributable to shareholders fell 85 percent to $12.3 million, or 12 cents a diluted share, from $82.2 million, or 85 cents, in 2009. The 2009 period had the non-cash income tax benefit. Sales gained 3.6 percent to $581.2 million from $560.9 million.