WET SEAL NET GUSHES

Byline: Jennifer Weitzman

NEW YORK — The Wet Seal, a junior and contemporary retailer, said that its income rose dramatically in its fourth quarter, beating Wall Street analysts’ expectations by a penny.
The better-than-expected results failed to propel Wet Seal’s stock upward. Shares slumped on the Nasdaq by $4.94, a 17.1 percent drop, to close at $23.94.
For the three months ended Feb. 3, the Foothill Ranch, Calif.-based company said it earned $12.9 million, or 98 cents a share, compared with $3.4 million, or 27 cents, in the year-ago period. Sales rose 23.3 percent to $176.5 million from $143.2 million and same-store sales were up 14.6 percent.
“Apparel-area sales — particularly tops and sweaters and denim bottoms — were pretty strong,” Kathy Bronstein, chief executive, said on a conference call.
Analysts said they were generally pleased with results.
“It was very good, very strong,” said Dennis Van Zelfden with Robinson-Humphrey, adding that the quarter’s results demonstrate that the company continues to get its act together on the merchandising side.
The 552-unit chain said it plans to open roughly 30 stores this year, the majority of which will debut in the second half, and will close 30. Eighteen Zutopia stores for teens are slated to be acquired from Gymboree Corp. on March 25. At the same time, the company plans, as reported, to discontinue its Limbo Lounge concept, converting the majority of stores into the Wet Seal format. Finally, it said it will convert the majority of its Contempo Casuals stores into Wet Seal banners.
For the year, Wet Seal’s earnings increased 37.6 percent to $19.5 million, or $1.54 a share, compared with $14.2 million, or $1.11. Sales were up 10.6 percent to $580.2 million from $524.4 million and comps improved 3.9 percent.