The Wet Seal Inc. Earnings Cheat Sheet: Third Consecutive Quarter of Profit Growth

The Wet Seal, Inc. (NASDAQ:WTSLA) reported its results for the third quarter. Wet Seal is a national retailer operating stores selling fashionable and contemporary apparel and accessory items designed for female customers aged 13 to 35 years old.

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The Wet Seal Earnings Cheat Sheet for the Third Quarter

Results: Net income for The Wet Seal, Inc. rose to $3.7 million (4 cents per share) vs. $2.6 million (3 cents per share) in the same quarter a year earlier. This marks a rise of 46.3% from the year earlier quarter.

Revenue: Rose 3.9% to $152.1 million from the year earlier quarter.

Actual vs. Wall St. Expectations: WTSLA fell in line with the mean analyst estimate of 4 cents per share. It fell short of the average revenue estimate of $157.7 million.

Quoting Management: “At Wet Seal this year, we also eliminated Halloween costumes and related merchandise, a historically low margin business for us, in order to maintain a brand-right fashion assortment in our stores. This was the right strategic decision for our long-term direction, but also challenged sales results in October.”Ms. McGalla continued, “At Arden B, we built upon our strength in the dress and jewelry businesses in the quarter, though were disappointed with our performance in other apparel and accessory areas. We will carefully manage inventories in this business as we identify opportunities for improvement.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 36.1% and in the first quarter, the figure rose more than twofold.

Revenue has risen the past four quarters. Revenue increased 13.1% to $148.8 million in the second quarter. The figure rose 13.3% in the first quarter from the year earlier and climbed 9.6% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company fell in line with estimates last quarter after beating forecasts in the previous quarter with net income of 3 cents versus a mean estimate of net income of 2 cents per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 8 cents a share to 5 cents over the last sixty days. The average estimate for the fiscal year is now 21 cents per share, down from 24 cents sixty days ago.

Competitors to Watch: Body Central Acquisition Corp. (NASDAQ:BODY), bebe stores, inc. (NASDAQ:BEBE), dELiA*s, Inc. (NASDAQ:DLIA), Limited Brands, Inc. (NYSE:LTD), The Cato Corporation (NYSE:CATO), Aeropostale, Inc. (NYSE:ARO), The Buckle, Inc. (NYSE:BKE), Abercrombie & Fitch Co. (NYSE:ANF), Pacific Sunwear of California, Inc. (NASDAQ:PSUN), and Zumiez Inc. (NASDAQ:ZUMZ).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

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