News of the lower than expected loss sent Wet Seal stock up by 7.8%, or 30 cents a share, to $4.15 by late Friday. Shares of the company's stock have increased by 28% in the last two weeks.
The Foothill Ranch, CA company said it closed 150 stores in a bid to return to profitability and expects to make "significant" changes to its stock-option charges. It also said it will no longer provide estimates for its future operating results. The specialty retailer currently operates 398 stores in 46 states, Washington DC and Puerto Rico.
The specialty retailer suffered steep losses in sales and earnings during 2004 and its stock lost three-quarters of its value. It was rescued from the brink of bankruptcy when SAC Capital put up $40 million to bolster the company's cash position, brought in a new chief executive and closed 153 stores.
So far, the efforts appear to be paying off. Despite the store closings, Wet Seal's net sales totaled $103.8 million, a 4% increase, for the quarter ending April 30, 2005 compared to the same period a year earlier when sales totaled $99.9 million. Sales for stores open at least a year also were up, soaring 29.8% in the first quarter. A year earlier, sales declined 17.2%.
The company said the latest quarter loss included $1 million in non-cash interest charges and $500,000 in non-cash stock compensation charges.
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