Wet Seal Reports Plunge in 3rd-Quarter Earnings

IRVINE —  The women’s apparel chain known for its flashy interiors and giant rock video screens, Wet Seal Inc., reported sharply lower third-quarter earnings Monday but expressed cautious optimism about holiday sales.

The Irvine-based retailer posted earnings of $1.2 million, or 10 cents a share, for the quarter ended Nov. 2, down 54% from $2.6 million, or 22 cents a share, for the same quarter last year. Sales rose 9.5%, to $33.3 million, from last year’s $30.5 million.

But same-store sales--those at stores that existed a year earlier--fell 12.2% during the quarter, the company reported. Wet Seal finished the quarter with 105 stores, up from 87 a year earlier.

“Obviously, we’re very disappointed with our third-quarter results,” Wet Seal President Ken Chilvers said in a statement. “Like most businesses, we’re really feeling the effects of the recession, particularly in California, where we have more than 70% of our stores.”

Wet Seal offers moderately priced clothing in stores that are usually in shopping malls. This has put the retailer at a disadvantage during the recession, as thrift-conscious shoppers have turned increasingly to discounters.

For the nine-month period, earnings were off 51%, to $2.9 million, or 25 cents a share, from $6 million, or 56 cents a share, for the year-ago period. Sales rose 7%, to $84.6 million, from $79 million last year.

Chilvers said he is “more optimistic than most” retailers about prospects for the Christmas season. “Our newly arriving merchandise is timely, our inventories are in superb shape and our expenses are firmly under control,” he said.

He said the company’s finances remain strong enough that the chain is going ahead with plans to add at least 20 new stores next year. It plans to open eight more stores during 1991. Wet Seal’s expansion has been mostly in Sunbelt states outside California, mainly in Florida and Texas.

Wet Eyes at Wet Seal

In the third quarter ended Nov. 2, Wet Seal Inc.’s earnings fell 54%, to $1.2 million, and revenue was up 9.5%, to $33.3 million. The company said the earnings decline reflected the effects of the slow economy, while the sales gain was due to the opening of new stores.

Figures are in thousands, except per-share data.

3rd Qtr. 3rd Qtr. 9 Months 9 Months 1991 1990 1991 1990 Revenue $33,351 $30,462 $84,644 $78,971 Net income 1,207 2,627 2,951 6,018 Per share 0.10 0.22 0.25 0.56

Source: Wet Seal Inc.