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Wet Seal Expects Loss; Shares Decline

March 21, 2003|From Bloomberg News

Wet Seal Inc., the teen clothing seller that fired its chief executive last month, said Thursday that it expects to have a first-quarter loss as customers buy less spring clothing. Shares fell 5.6%.

The Foothill Ranch-based company also said it had a fiscal fourth-quarter loss of $5.65 million, or 19 cents a share, contrasted with net income of $15.3 million, or 49 cents, a year earlier. Sales in the three months ended Feb. 1 fell 11% to $161.2 million, from $181.5 million.

Looking ahead, the retailer said it expects a loss of as much as 27 cents a share in the quarter ending May 3, contrasted with net income of 28 cents a year earlier.

Same-store sales, or sales at stores open at least a year, may fall as much as 28% this month and 14% in April, Wet Seal said. It is expected to have profit of 7 cents, according to Thomson First Call.

The company had to discount merchandise after shoppers bought fewer peasant blouses and decorated jeans than expected. It also ordered spring clothing later than usual, so fewer new items were available when the weather became warmer, Chief Financial Officer William Langsdorf said.

"Because there was no significant fashion trend in the business, the company waited until the last minute to order fresh merchandise," he said.

Class A shares of Wet Seal fell 44 cents to $7.46 on Nasdaq. The stock has fallen 31% this year.

The company has more than 610 stores in the Wet Seal, Contempo Casuals, Arden B. and Zutopia chains.

Many retailers that sell to teenagers have faced slowing sales as customers curb spending, analysts have said.

Wet Seal last month fired CEO Kathy Bronstein. Chairman Irving Teitelbaum succeeded her on an interim basis while the company searches for a new chief executive.

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