Share Price of Wet Seal Up 21% in 1st Offering : Retailing: The Orange County chain said the initial sale did not meet investor demand.

Wall Street flipped over Wet Seal Inc. on Tuesday.

In its initial public offering, the stock of the Irvine-based chain of women’s casual clothing stores soared 21%. Wet Seal closed up $3 a share at $17.25, as the third most active stock on the over-the-counter national market.

The company sold 3 million shares of its common stock at $14.25 per share. Of that, 2.88 million shares were sold by the company and 125,000 shares by Suzy Shier Inc., a Canadian retailer that bought Wet Seal in 1984.

The company said the offering did not meet investor demand. Wet Seal also granted the underwriters--First Boston Corp. and Bear, Sterns & Co.--an option to purchase up to an additional 375,000 shares of stock to cover over-allotments.

Wet Seal said it would use the proceeds from the stock sale--more than $40 million--to repay $20 million in loans to a Canadian company, upgrade the company’s computer system, expand its distribution center in Irvine and pay for new stores.

Wet Seal has 78 stores, 71 in California and the rest in Arizona, Hawaii and Nevada, which sell trendy clothes to young women. The company plans to expand to the East Coast this summer by opening several stores in Florida.

The company’s strategy has been to open stores in areas with similar climates so it can sell the same clothes at all its outlets and buy from suppliers in large volumes.

Started on Balboa Island in 1962, Wet Seal expanded to 17 stores in 1984, when Suzy Shier bought the company. The Canadian retailer transformed the stores into splashy venues with monitors on the walls showing rock videos and other glitzy touches.

The extra expense paid off: Wet Seal has grown rapidly while sales for similar retailers have sometimes been sluggish.

The company reported earnings of $5.9 million on sales of $78.7 million for its fiscal year ending in February. That compared to earnings of $1.8 million on sales of $44.9 million the year before.