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Irvine's Wet Seal Loses $2.3 Million for Period, Promotes 2 Executives

March 19, 1994|CHRIS WOODYARD | TIMES STAFF WRITER

IRVINE — Wet Seal Inc., the young women's fashion apparel chain, promoted two senior executives Friday as it released annual results showing it lost $2.3 million primarily because of poor fourth-quarter sales.

Kathy Bronstein, who has been the company's president, now becomes vice chairwoman. She retains her role as chief executive officer, the company said.

She is being replaced as president by Edmond Thomas, who was previously executive vice president. He retains his additional title of chief operating officer.

Chairman Irv Teitelbaum said in announcing the changes that the "new appointments give appropriate recognition to their dynamic co-managerial roles."

The promotions came despite the losses, which an analyst said reflect the poor performance of the industry last year and not just Irvine-based Wet Seal.

For the fiscal year ended Jan. 29, Wet Seal's losses amounted to 19 cents a share, compared to earnings of $3.6 million, or 29 cents a share, for the previous fiscal year. Revenue was also down, to $140.1 million, off 6.4% from last year's $149.7 million.

Wet Seal closed Friday at $4 a share, down 25 cents, in trading on the Nasdaq.

Bronstein blamed the loss on "cautious spending habits" by junior apparel customers in the fourth quarter. She noted, too, that "the extensive 'grunge'-related fashion looks offered by the company were poorly received" and that "holiday sales were very disappointing, requiring heavy promotional activity."

Fourth-quarter losses amounted to $1.6 million, or 13 cents a share, compared to a loss of $410,000, or 3 cents a share, in the same period last year. Sales were $34.54 million, down 2.6% from sales of $35.48 million last year.

Tom Tashjian an analyst for the investment banking firm of First Manhattan Co. in New York, said he thinks Wet Seal "did a good job in 1993 in restructuring management and bringing in some very strong people. They also did a reasonably good job of getting rid of some under-performing or losing stores."

(In the past year, the company gained new directors of sales and information systems and a new chief financial officer. Others saw their titles shuffled as part of the reorganization.)

Despite the earnings disappointments, Tashjian said Wet Seal enters the year with a strong balance sheet, a ready reserve of cash and plans to expand in the New York area, where its first store in the Staten Island Mall may become one of the chain's top performers.

The chain continues to be penalized by having so many stores in Southern California, which is recovering more slowly from recession than the rest of the country.

Wet Seal now has 130 stores in California, Arizona, Nevada, Hawaii, Florida, Texas, Georgia, Louisiana and New York. It opened 10 new stores in 1993 and closed five others.

The company said its losses for the year reflect the store closings, as well the impact of the Northridge earthquake on 10 stores, including two that remain closed.

Also Friday, the company appointed three executives to newly created vice president positions. Ann Cadier Kim, chief financial officer, has been promoted to vice president of finance; Marc R. Bertone, director of real estate and general counsel, has become the vice president of real estate; and Sharon Hughes, the divisional merchandising manager, adds the title of vice president of merchandising.

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