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ORANGE COUNTY EARNINGS

Wet Seal Stock Hits Yearly High on News of 2nd-Quarter Results

August 22, 1996|GREG JOHNSON | TIMES STAFF WRITER

IRVINE — Wet Seal Inc. shares rose to a new yearly high Wednesday after the women's apparel retailer reported second-quarter earnings that were higher than analysts had expected.

The stock climbed to $35.25 in Nasdaq trading before retreating slightly to close at $34.375, up $4.625.

Wet Seal reported net income of $3.3 million, or 25 cents per share, for the quarter ended Aug. 3, compared to a $733,000 loss a year earlier. Wall Street analysts had expected the company to report earnings of 12 cents per share.

A year ago, the Irvine-based company's stock was mired under $5 as Wet Seal struggled to combat weak demand in the junior women's segment and to complete its June 1995 acquisition of the 237-store Contempo Casuals chain.

Analysts said the company is on track with its fashion selections and seems to have successfully assimilated Contempo Casuals.

"Chief Executive Officer Kathy Bronstein is aggressive when it comes to buying, and she's great with merchandising," said Eric Appell, an industry analyst with Torrey Pines Securities in San Diego. "And [Chief Operating Officer] Ed Thomas is strong on the financial end. That's a good team."

Bronstein said the retailer is "extremely pleased with our sales performance, which continued to gain momentum throughout the second quarter. . . . We are looking forward to a successful back-to-school selling season."

Quarterly sales--which now include the Contempo Casuals chain--more than doubled, to $94.4 million from $45.2 million a year ago. Sales in stores open at least a year--an important measure of success in the retail industry--rose by 16.5% during the quarter.

Wet Seal, which sells moderately priced casual apparel and accessories, operates 364 stores in 35 states and Puerto Rico.

The company reported a profit of $4.04 million, or 31 cents a share, for the first half of its fiscal year, compared with a loss of $1.4 million, or 11 cents a share, a year ago. Sales rose to $174.9 million from $75.1 million.

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