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Earnings and Outlook Roundup

Wet Seal swings to loss in quarter

November 30, 2007|From Times Wire Services

Clothing retailer Wet Seal Inc. reported a quarterly loss, hurt by a one-time charge and weak sales of its teenage fashions.

The company, which runs the Arden B. chain in addition to its namesake stores, also forecast lackluster sales in the current quarter, which includes the holiday shopping season.

Wet Seal posted a net loss of $3.3 million, or 4 cents a share, in its fiscal third quarter ended Nov. 3, contrasted with net income of $2.4 million, or 2 cents, a year earlier.

Excluding an asset impairment charge of $1.6 million, the loss was 2 cents a share.

Sales rose 5% to $150.3 million, but sales at stores open at least a year, or same-store sales, fell 3.4%.

The Foothill Ranch company said its results were below its plan because of aggressive markdowns needed to clear out old inventory to make room for new merchandise for the key holiday shopping season.

"We continue to monitor inventory levels carefully as we expect the retail environment to remain highly competitive during the holiday season," Chief Executive Ed Thomas said.

Wet Seal is one of many retailers feeling the pinch as fears about the economy cause consumers to rein in spending. It plans to slow its store count growth rate from 15% in the current year to about 5% next year.

It expects fiscal fourth-quarter sales of $168 million to $171 million, below analysts' average forecast of $173.8 million, according to Reuters Estimates.

Wet Seal forecast a same-store sales decline of 4% to 6% in the fourth quarter. It expects earnings of 3 to 6 cents a share. Analysts' average forecast is 5 cents.

Wet Seal shares closed down 23 cents at $2.10.

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