The Wet Seal Inc. said Thursday that, despite tight inventory and expense controls, fourth-quarter profits eroded 64.8 percent.
This story first appeared in the March 27, 2009 issue of WWD. Subscribe Today.
Additionally, despite the Arden B. division’s 32.1 percent decline in same-store sales during the period, Wet Seal has no plans to get rid of the operation.
For the period ended Jan. 31, net income fell to $4.3 million, or 4 cents a diluted share, from $12.2 million, or 13 cents a share, in the year-ago period. Excluding impairment charges and benefits from unredeemed store credits, gift cards and gift certificates, net income was 9 cents a share, 2 cents better than analysts expected. Revenue receded 13.7 percent to $154.9 million, including “breakage” benefits of $300,000, from $179.6 million, including benefits of $3.7 million, last year.
Comparable-store sales slid 13.4 percent, as Arden B.’s decline was offset by an 8.6 percent drop at the company’s namesake unit.
Edmond Thomas, chief executive officer, said on the company earnings call that Wet Seal “may accelerate store closures” at Arden B., leases of which are up in four to five years, but denied plans for its closure. Pointing to improvements in the brand’s pricing strategy, cost structure and inventory, Thomas assured analysts, “We have no plans to dispose of this division or close this division.”
Net income for the year jumped 29.8 percent to $30.2 million, or 30 cents a share, versus $23.2 million, or 23 cents, a year earlier. Sales declined 3 percent to $593 million from $611.2 million in the prior year.
The Foothill Ranch, Calif.-based retailer said it expects first-quarter EPS between 2 cents and 6 cents on sales of $131.2 million to $137.5 million, including a comp decline of 3 percent to 8 percent. The company will open one Wet Seal store and close two Arden B. stores during the quarter, but said it expects its store count to remain flat or decline slightly for fiscal 2009.