Wet Seal Tops Zacks Estimate - Analyst Blog

The Wet Seal, Inc. (WTSLA) reported fourth-quarter fiscal 2009 (ended January 30, 2010) earnings of 10 cents per share (excluding special items) which surpassed the Zacks Consensus Estimate by 2 cents. The company earned 9 cents in the year-ago quarter. Net sales in the reported quarter came in at $151 million as against $154.9 million in the year-ago quarter, down approximately 2.5%. Consolidated comparable store sales declined 4.5% for the quarter.
 
Segment-wise, Wet Seal net sales declined approximately 3.1% year-over-year to $126.64 million. Arden B net sales for the quarter rose 0.8% to $24.4 million. Comparable store sales for Wet Seal declined 6.7% whereas, comparable store sales at Arden B stores climbed 8.8%.
 
As of year-end, Wet Seal’s inventory per square foot increased 12% compared to the prior year-end, with Wet Seal up 6% and Arden B up 54%. The company opened four Wet Seal stores during the fourth quarter of 2009. At the end of fiscal 2009, Wet Seal operated 504 stores in 47 states, the District of Columbia and Puerto Rico, including 424 Wet Seal stores and 80 Arden B stores.
 
Operating income for the reported quarter stood at $9.6 million, or 6.4% of net sales, as against $4.6 million, or 3% of net sales, in the year-ago quarter.
 
During the quarter, Wet Seal repurchased 2,025,720 shares of its Class A common stock at a total cost of approximately $7.3 million, under the $12.5 million share repurchase program approved by the Board of Directors in November 2009.
 
In February 2010, the company utilized the remaining capacity under the program and repurchased an additional 1,394,162 shares of Class A common stock at a total cost of approximately $5.2 million.
 
The company earned 23 cents per share (excluding special items) for fiscal 2009 as against 38 cents in fiscal 2008. Net sales for fiscal 2009 declined approximately 5.4% year-over-year to $560.9 million from $593 million in fiscal 2008. Consolidated comparable store sales declined 7.1% in fiscal 2009. Comparable store sales decreased 8.5% at Wet Seal stores and increased 0.2% at Arden B stores.
 
Guidance
 
Wet Seal has issued guidance for the first quarter of fiscal 2010. The company now expects to earn in the range of 6 cents-8 cents (excluding special items) in the first quarter of fiscal 2010.
 
The company projects total net sales for the first quarter between $138 million and $140 million. Comparable store sales are expected to increase in the range of 2% to 4%. In the first quarter of fiscal 2009, the company reported total net sales of $132 million, with a 7.3% decline in comparable store sales. The company plans to open 25 to 40 net Wet Seal stores with no net change in the number of Arden B stores, during fiscal 2010.
 

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