Wet Seal executives discussed the company's 2005 performance during a conference call with financial analysts Thursday. The company also noted the appointment this week of Gregory Gemette as president of Arden B. Merchandise, which he joins from his previous post as SVP of G+G Retail Inc.
Considering the ups and downs the company has endured in recent years, CEO Joel Waller sounded one of the most optimistic notes in a long time when he said, "We conservatively estimate that there is room for 300 more Wet Seal and 100 more Arden B. locations in the US." For 2006, the company expects to open 20 to 25 new stores.
Waller called the figures "a moderate expansion plan" and "a prudent approach." If current business trends continue, he said, Wet Seal "will accelerate the number of store openings to 15% to 20% a year but only after ensuring that we have the infrastructure in place to do it seamlessly."
Wet Seal's $2.8 million quarterly loss compared with a loss of $47.8 million, or $1.31 per diluted share, in the fourth quarter of the previous year. The latest quarterly loss included $6.8 million in non-cash stock compensation charges, $3.1 million in non-cash interest charges associated with conversions of its convertible notes and $600,000 in other charges.
For the fiscal year, the $1.19 per-share loss compared to a loss of $198.3 million, or $5.89 per diluted share. Both years' financial results suffered from one-time charges.
Sales climbed 18.6% to $141.4 million for the quarter and 15% to $500 million for the year. The increase was driven by a 44.7% increase in comparable store sales, which have been climbing since Wet Seal began closing underperforming stores.
Waller commented that in light of the company's trimming its losses and boosting comp-store sales, "Our primary goal in fiscal 2006 is to make further improvements in operating income rates, and we now have ample evidence that we are in a position to begin to open new locations to drive growth in sales and profits," Waller said.
The Wet Seal Inc. operates 400 stores in 46 states, the District of Columbia and Puerto Rico, including 308 Wet Seal stores and 92 Arden B. stores.
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