Comparable store sales up during Q2 - Wet Seal
The Wet Seal Inc, a leading specialty retailer to young women, announced results for its fiscal second quarter ended July 30, 2011, and introduced guidance for the third quarter of fiscal 2011.
For the second quarter:
• Net sales were $148.8 million compared to net sales of $131.5 million for the prior year second quarter.
• Consolidated comparable store sales increased 6.0%. Comparable store sales for Wet Seal increased 6.2% and for Arden B increased 5.0%.
• Operating income was $3.3 million, or 2.2% of net sales, compared to $2.6 million, or 2.0% of net sales, in the prior year second quarter.
• The current year quarter included $1.1 million in non-cash asset impairment charges and the prior year quarter included $1.0 million in non-cash asset impairment charges.
• Net income was $2.2 million, or $0.02 per diluted share, as compared to $1.6 million, or $0.02 per diluted share, in the prior year quarter. Excluding the after-tax effect of the non-cash asset impairment charges, net income would have been $2.8 million, or $0.03 per diluted share, in the current year quarter, and would have been $2.2 million, or $0.02 per diluted share, in the prior year quarter.
• As of quarter-end, the Company's inventory per square foot was up 2% versus the prior year quarter, with Wet Seal up 1% and Arden B up 7%.
• The Company generated cash flows from operations of $9.5 million during the second quarter, and ended the quarter with $147.8 million of cash, cash equivalents and short-term investments, and no debt.
Ms. Susan McGalla, chief executive officer of The Wet Seal, Inc., commented, "We were pleased with continued momentum in our business through the second quarter as we entered the back-to-school selling season. We generated our strongest second quarter comparable store sales results since 2005, reflecting continued strength and balance in our merchandise assortments, a clarified message of unique fashion at a value in our Wet Seal stores, and a strengthening of the business trend in our Arden B stores.
"We also ended the second quarter comfortable with the level and overall content of our inventories."
Ms. McGalla continued, "In the first half of August, during important early weeks of the back-to-school season, we have been encouraged by continued mid-single digit positive comparable store sales on a consolidated basis."
Store Openings and Closings
The Company had eight store openings and two store closings at Wet Seal and no store openings or closings at Arden B during the second quarter. At July 30, 2011, the Company operated 542 stores in 47 states and Puerto Rico, including 460 Wet Seal stores and 82 Arden B stores.
Capital Expenditures and Depreciation
During the second quarter, the Company incurred capital expenditures of $8.1 million, of which $6.8 million was for construction of new stores and remodels of existing stores. The Company recognized tenant improvement allowances of $1.1 million associated primarily with new store construction, resulting in net capital expenditures for the quarter of $7.0 million.