Wet Seal Forecasts Growth, Challenges
Wet Seal Inc. has announced that it will open more stores next year and its same-store sales declined in May.
Joel Waller, Wet Seals’ chief executive officer, revealed the expansion plans and soft sales figures during a May 22 conference call to report the results of Wet Seal’s first fiscal quarter, which ended April 29.
The Foothill Ranch, Calif.–based retailer, which will open 20 to 25 stores in 2007, reported a gross profit of $46.8 million compared to $32.6 million from the first quarter in the previous year.
Financial analysts applauded Wet Seal’s first quarter results even though the retailer forecast that it would report a single-digit decline for its same-store sales in May.
The loss may have been rooted in the store’s success.
Waller said the retailer could not keep up with the high demand for fashion tops and dresses. “Delivery from vendors was our biggest issue,” he said.
Lack of inventory could also hurt June sales according to Liz Pierce, a retail analyst who follows Wet Seal for the Los Angeles office of financial services company Sanders Morris Harris. In a May 23 research note, she wrote that while Wet Seal’s sales may be under pressure for the next few weeks, she said she believes the delivery problems of the last month are not based on structural problems with the retailer’s merchandising strategy. She said that Wet Seal’s merchandising would continue to generate positive results for the company this year.
—Andrew Asch
