The Wet Seal, Inc, a leading specialty retailer to young women, announced financial results for the third quarter ended November 2, 2013, and provided its financial outlook for the fourth quarter of fiscal 2013.
Third Quarter Fiscal 2013:
Net sales totaled $127.7 million versus net sales of $135.5 million in the third quarter of 2012.
Consolidated comparable store sales increased 0.8%, including an increase of 1.7% at Wet Seal and a decrease of 6.7% at Arden B.
Gross profit increased 11% to $28.9 million compared to $26.0 million a year ago, while gross margin expanded 350 basis points to 22.7% of sales versus 19.2% of sales in the third quarter of 2012. The year-over-year increase is primarily attributable to substantial improvement in merchandise margin due to reduced markdown levels, despite the highly promotional retail environment.
Operating loss was $14.9 million compared to operating loss of $24.8 million in the third quarter of fiscal 2012. The current year and prior year quarters include $5.1 million and $6.5 million, respectively, of non-cash asset impairment charges.
Operating loss in the prior year period also includes $2.1 million in professional fees to defend against a proxy solicitation. Non-GAAP adjusted operating loss, excluding the effect of the aforementioned charges, was $9.8 million in the third quarter of fiscal 2013 compared to non-GAAP adjusted operating loss of $16.2 million in the prior year period.
Provision for income taxes was $0.1 million compared to a benefit for income taxes of $10.0 million in the prior year quarter. The Company ceased recording benefits for income taxes on pre-tax losses upon establishing a valuation allowance against its deferred tax assets at the end of fiscal 2012.
Net loss totaled $14.9 million, or $0.18 per diluted share, compared to net loss of $14.8 million, or $0.17 per diluted share, in the prior year quarter. Non-GAAP adjusted net loss in the third quarter of fiscal 2013, excluding the after-tax effect of non-cash asset impairment charges, totaled $9.9 million, or $0.12 per diluted share.
Non-GAAP adjusted net loss in the third quarter of fiscal 2012, excluding the after-tax effect of non-cash asset impairment charges, and proxy solicitation costs, was $9.7 million, or $0.11 per diluted share.
At quarter end, the Company’s inventory per square foot was down 5% versus a year ago, including a decrease of 3% at Wet Seal and 20% at Arden B.
As of November 2, 2013, the Company remained in strong financial condition, with $65.9 million of cash and cash equivalents and no debt. Merchandise inventories totaled $42.6 million compared to $46.2 million a year ago.