WET SEAL BOOSTS NET IN QUARTER
Byline: Jennifer Weitzman
NEW YORK — Riding fashion trends that struck a chord with its economically resilient teen shopper, Wet Seal matched consensus estimates and delivered a 19.5 percent increase in its fourth-quarter profits.
In addition, WS said, based on the strong business trends, it expects to beat existing consensus estimates in the current first quarter
The Foothill Ranch, Calif.-based junior and contemporary retailer, which operates the Wet Seal, Arden B. and Zutopia chains, reported income of $15.3 million, or 74 cents a diluted share, for the 13-week period ended Feb. 2. Last year, income for the 14-week quarter was $12.9 million, or 65 cents. Full-priced spring fashion helped sales ring in $181.5 million, 2.8 percent higher than the year-ago sales of $176.5 million. Same-store sales gained 7 percent versus an increase of 14.6 percent last year. Adjusting for the extra week, sales grew 8.2 percent.
Company executives said on a morning conference call that new stores and increased marketing efforts — including a new print ad campaign, in-store parties and a contest — helped bring in increased traffic and a broader audience, despite generally lower mall counts.
Last week, WS introduced its cosmetics line, Seal Glamour, in 180 stores. Steven Strickland, senior vice president of creative and market at WS, said he was pleased with the initial sales, despite the absence of immediate marketing support.
Walter Parks, chief financial officer, said based on achieving high-single- to low-double-digit comp growth in the first quarter, WS expects earnings per share to be in the range of 32 to 35 cents, above current consensus estimates ranging from 28 to 30 cents.
WS, which operates 568 retail stores, plans to open roughly 50 WS stores, 15 to 20 Arden B. stores and 10 to 15 Zutopia stores.
For the year, income grew 59 percent to $31 million, or $1.52 a diluted share, versus income of $19.5 million, or $1.03, in the prior year. Sales grew 3.7 percent to $601.9 million from $580.2 million. Excluding the extra week of selling in the prior year, net sales grew 5.3 percent. Comps expanded 4.7 percent against a 3.9 percent jump last year.