Wet Seal Loses Less

Wet Seal's quarterly loss amounted to 14 cents per share and compared with a loss of $24.2 million, or 67 cents per share, for the comparable quarter last year. Since then, the company has closed 153 Wet Seal stores and overhauled its merchandise selection in an effort to get back on a profitable track.

"While we certainly still have a lot of work to do," Waller said, "We've come a long way in a relatively short period of time." He called Wet Seal a company in "late-stage" turnaround.

Waller also noted that, later this week, the company expects to report a comparable sales increase of slightly better than 50% for the four weeks ended Nov. 25. Wet Seal's posted a comparable store sales increase of 46.6% for the quarter ended Oct. 29, but that number reflected the far lower store count resulting from the closing of the 153 stores since last year. Wet Seal now operates 309 locations.

Total sales for the latest quarter increased 16.7% to $129.3 million versus net sales of $110.8 million for the same period last year. The company generated operating income $300,000 for the third quarter, its first quarterly positive operating income since the second quarter of fiscal 2002.

Waller attributed the chain's change of direction to a number of factors, including merchandising. "We've created an assortment that is affordable fashion, turning fast, bringing a lot of newness into the stores frequently, and at prices that make it highly acceptable to a large number of consumers," the Wet Seal CEO said. He added that the Arden B stores, which are more upscale, have "a more sophisticated target consumer than Wet Seal" and "didn't need the kind of merchandise realignment" that Wet Seal required.

The 93 Arden B stores have remained "stable and healthy," and the chain represents "a strong potential growth vehicle," according to Waller. He said the 20 to 25 stores that Wet Seal hopes to open next fiscal year could be Wet Seal locations, Arden B sites or a combination of the two.