Wet Seal Posts Narrower Loss; Sales Climb 20%
Women’s clothing retailer Wet Seal Inc. on Monday reported a narrower fiscal second-quarter loss after sales growth and operating margins improved.
The Foothill Ranch-based company said it lost $35 million, or 87 cents a share, in the quarter ended July 30, compared with a loss of $106.3 million, or $3.31, a year earlier.
The 2004 period included a large write-down of assets as the company’s business deteriorated. The latest quarter included special charges related to the company’s compensation agreement with Michael Gold, a consultant hired to help in turnaround efforts.
Wet Seal said its sales jumped 20% to $126.3 million in the recent quarter compared with a year earlier. The company’s loss from continuing operations was $11.7 million, compared with $106.2 million a year earlier.
“Our accelerated sales growth and operating margin improvements have led to a significant improvement in operating results,” Wet Seal Chief Executive Joel Waller said.
Wet Seal, which has lost money since fiscal 2003 and has closed more than 150 stores over the last year, warned as recently as June that it could be forced to seek Chapter 11 bankruptcy protection if its operating losses continued. The company previously disclosed that the loss it reported a year ago triggered a Securities and Exchange Commission probe.
In May, Wet Seal closed an equity financing deal to raise additional funds. Waller said the financing, along with a rebound in same-store sales last quarter and better operating margins, had significantly improved the company’s liquidity.
The firm operated 305 Wet Seal stores and 91 Arden B. stores as of July 30.
Its shares rose 24 cents to $5.55. They have jumped 145% since Dec. 31.