Joel Waller, Wet Seal's CEO, pointed out that the company earned an operating income of $4.2 million for the quarter ended July 30 before the compensation charges for Gold, which included $2.1 million in cash compensation and $14 million in non-cash stock compensation. Waller said that the company's circumstances have improved considerably since it raised funds in a May financing and since it boosted same-store sales. Comparable store sales from continuing operations soared to 55.9% versus a 10.9% drop for the same 13-week period a year ago.
Wet Seal achieved the comparable sales turnaround in part by closing 153 stores during the fourth quarter of 2004 and the first quarter of this year. Despite the closings, its net sales for the latest quarter rose to $126.3 million, compared with net sales of $105.7 million for the same period last year. In the latest quarter, the company reopened three locations and closed five, leaving it with 305 Wet Seal and 91 Arden B. stores at the end of the quarter. It says it has "substantially completed" the store-closing program.
In addition to the closing of low-volume stores, the company cited a number of factors that contributed to the improvement in the latest quarters. These included significantly lower markdowns, lower spending for advertising and the discontinuation of its in-store Seal TV entertainment network.
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