IRVINE — The Wet Seal Inc., a retailer of trendy women's clothing, on Wednesday reported "disappointing" holiday sales, joining the chorus of retailers who say they've been hurt by the slowing economy and fears of war in the Mideast.
The company said in an announcement that stock analysts' estimates for year-end earnings of 80 cents a share "may be overly optimistic" by as much as 10 to 12 cents. The company reported earnings of 56 cents per share for the first three quarters of the current fiscal year compared to 40 cents in the same period last year.
But Wet Seal said the poor holiday sales performance would not affect its plans to build 20 new stores in 1991, the same number as this year. The company said now is a good time to sign relatively inexpensive long-term leases. Real estate--like retailing--is in a slump.
Other retailers--from giant Sears, Roebuck & Co. to department store chains like Marshall Field's--Wednesday reported lower sales during the vital Christmas season, when many stores take in a majority of their sales for the year.
At Wet Seal, "lackluster" sales forced the company to mark down its prices earlier than planned, especially in Southern California, where many of the company's 93 stores are located, the company said.
In the current fiscal year, the company reported net earnings of $6 million on sales of $79 million for the nine months ended Nov. 3, compared to its net income of $3.8 million on sales of $54 million for the same period last year.
But sales per store are expected to decrease this quarter, said Chief Financial Officer Alan Weinstein, although the company wouldn't disclose how steep a drop it expects.
Sales in Florida, however--where the company opened five stores this year--were better than the company had expected. Most of the new stores the company will open this year will be in that state. The chain also has stores in Arizona, Nevada and Hawaii.
Wet Seal's stock closed unchanged at $9 Wednesday in trading on the over-the-counter market. Its statement on year-end sales was released after the market closed.
Most retailing stocks have been hurt by a drop in consumer confidence, which was shaken by Iraq's invasion of Kuwait in August and growing expectations of recession.
A high-flying stock in July--when the chain went public at $14.25--Wet Seal climbed to $19 a share before the Middle East crisis. Then its stock plummeted. Wet Seal got clobbered so hard "because it was a new stock and the street didn't know us very well," Weinstein said.
Wet Seal started in 1962 as a beachwear store on Balboa Island and now sells moderately priced clothing for young women.
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