Wet Seal Says Sales Decline May Translate to Flat Profits

Wet Seal Inc. warned Thursday that second-quarter profits could be flat because of a recent dip in sales. The Foothill Ranch-based retailer of young women’s apparel said sales at stores open a year or more--a key measure of growth--are “down mid-single-digit” so far this quarter.

It is not yet clear what effect the slower sales will have on the company’s second quarter, ending July 31. But the company said earnings could be in line with year-ago results, which were 35 cents a share, or $4.9 million.

Analysts were predicting earnings of about 44 cents a share, or $4.7 million.

Sales have been weakest in the company’s two biggest markets, California and Florida, which together account for more than 40% of Wet Seal’s sales, said Joan Bogucki, an analyst with Wedbush Morgan Securities, who last month downgraded Wet Seal’s stock to “long-term attractive” from “buy.”

“With continued weakness in those markets, I would anticipate it will definitely have an impact,” she said.

Unseasonably cool weather in California could be hurting sales of summer merchandise.

Chief Executive Kathy Bronstein said in a statement that the effect of the sales decline could be lessened by Wet Seal’s “stringent cost controls” and other measures.

Wet Seal shares fell 75 cents, to $26.75. The news was released after the markets closed.