Wet Seal Inc., operator of the chain of trendy young women’s clothing stores, Thursday reported disappointing earnings in the fourth quarter as sales slumped in December and January.
The Irvine-based retailer said that for the 13 weeks ended Feb. 2 it had net income of $1.2 million on sales of $28.5 million, contrasted with earnings of $2.1 million on sales of $24.7 million for the same period a year ago.
The opening of 20 stores in 1990 boosted Wet Seal’s fourth-quarter sales. But comparable store sales--which compare current to year-ago sales at the same store--were down 13.4% in the last quarter.
For the 1991 fiscal year, the company reported earnings of $7.2 million on sales of $107.4 million, compared to earnings of $5.9 million on sales of $78.7 million for the year before.
The results were below some analysts’ projections. Still, analysts said Wet Seal has a bright future.
Wet Seal is “hurting because apparel overall is hurting,” said Kathy Noyes, a consultant with Russell Reynolds Associates Inc. of Los Angeles, an executive recruiting company that specializes in retail. “But if you look at other apparel retailers with less defined concepts, you’ll find they’re hurting more. Wet Seal will come around--their stores look great, and they really know their customer.”
Ken Chilvers, Wet Seal’s president and chief executive officer, blamed the poor performance on the drop in consumer confidence prompted by the Gulf War and the ravages of the nation’s recession.
“The war in the Persian Gulf, combined with a national recession that hit Southern California particularly hard, caused a dramatic decline in consumer confidence, which significantly impacted sales during the second half of the year,” he said.
Still, Chilvers said the company will forge ahead with its planned 17- to 20-store expansion in 1991. The expansion into other geographic areas will help lessen its susceptibility to regional economic factors, he said.
The company, which started as a Balboa Island boutique in 1962, opened its first five East Coast stores in Florida in 1990 and plans to open 13 more stores there in 1991. Wet Seal currently operates 95 stores in California, Nevada, Arizona, Hawaii and Florida.