Wet Seal Sales Rise, but CEO Puts Her Foot Down
The Wet Seal Inc. reported a 6 percent same-store-sales increase for the second quarter of fiscal 2011. Net sales were $148.8 million, compared with net sales of $131.5 million last year.
But during a conference call with Wall Street analysts on Aug. 18, Wet Seal Chief Executive Officer Susan McGalla said the Foothill Ranch, Calif.–based retailer is going to make changes— or had already changed in the way it deals with vendors—in its pricing and its store experience.
While same-store sales were up for its fashion denim business, business was down for its more popularly priced core denim business. Perhaps the only step backward in Wet Seal’s business during its second quarter was with its core denim business. McGalla said there were quality problems with the core denim merchandise.
“We are not going to accept poor quality and pass it to our customers,” McGalla said during the call. “That is something we’re going to be rigid about.” She also said the company was going to demand vendors better comply with delivery deadlines.
McGalla joined Wet Seal in January, and toward the beginning of her tenure, she ordered an outside group to conduct a wideranging marketing survey of Wet Seal’s customers and how the retailer could improve operations at its fleet of 542 stores.
While the results of the study will be confidential, McGalla told the analysts that it presented many opportunities for the company’s Wet Seal division and its more contemporary Arden B. division. “It will refine the brand DNA,” McGalla said. Some of the study’s suggestions will be implemented in the next quarter. Others will be implemented in 2012.
The proprietary study considered matters such as store presentation, advertising and pricing. During the call, McGalla said that the retailer will seek to simplify its pricing at its Wet Seal divisions. The company also hopes to boost prices in Wet Seal’s e-commerce operation, making it less reliant on markdowns.
One problem in Wet Seal’s physical stores is that some similar merchandise is priced differently, sometimes just with a 50 cent difference. The retailer fielded complaints on the small price differences for similar items and promised to make its pricing more clear to consumers.
The company had eight store openings during the second quarter, and McGalla forecasts the store’s fleet size could eventually reach 750 stores. For its third quarter, same-store sales are forecast to increase to the mid-single digits.
