Wet Seal (WTSLA) Comps Down 4.6% in December 2009

The Wet Seal, Inc. (NASDAQ: WTSLA), a leading specialty retailer to young women, reported net sales and comparable store sales for the five-week period ended January 2, 2010, or fiscal December.

• The Wet seal sales were down 3.1% Y/Y, and comps were also down 7.3% this year.
  
  
• Arden B saw an increase in sales for December of 6%, and comps up 14.%.
  
  
• Total net sales for Wet Seal and Arden B were down 1.8% Y/Y, and comps were down 4.6% Y/Y.

Ed Thomas, president and chief executive officer of The Wet Seal, Inc., commented, “December shopping patterns were consistent with our expectations. Comparable store sales improved in the last two weeks of the month, as many customers delayed holiday shopping to the final few days before Christmas and the week after Christmas. Through careful inventory and promotional planning, we maintained merchandise margin performance in line with our expectations at both divisions through the holidays.

“As we near our fiscal year-end, we are pleased with inventory levels at both Wet Seal and Arden B. Given an extremely low inventory position at Arden B and light denim inventory at Wet Seal at the end of January last year, we are planning moderately higher inventories in both divisions at this year-end that should position us for comparable store sales growth opportunity in the first quarter of fiscal 2010. We also remain very pleased with our strong balance sheet, with projected cash in excess of $150 million and debt of just $3.5 million as of fiscal year-end.”

Mr. Thomas concluded, “We currently estimate fourth quarter earnings will be in the range of $0.06 to $0.07 per diluted share, which is within the high end of our previous guidance range of $0.03 to $0.07 per diluted share. Our expectations reflect gross margin performance in line with our previous guidance and continued cost management discipline in all other areas of our business. Our earnings guidance does not include any non-cash benefit to income taxes for the potential reversal of our deferred income tax valuation allowance or any estimate for potential non-cash long-lived asset impairment charges.”

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