'Q4 is a difficult period for retail industry' - Wet Seal CEO
27 Mar '09
5 min read
For the full year: • Net revenues were $593.0 million as compared to $611.2 million in fiscal 2007. Net sales in the current year included a $0.9 million "breakage" benefit resulting from a reduction to deferred revenues for unredeemed gift cards, gift certificates and store credits. In 2007 net sales included a $3.7 million "breakage" benefit. • Consolidated comparable store sales decreased 8.5%. Comparable store sales for Wet Seal decreased 4.5% and for Arden B decreased 23.5%. • Operating income was $32.2 million, or 5.4% of revenues, compared to $19.3 million, or 3.2% of revenues, in fiscal 2007. Operating income for the year included the $0.9 million "breakage" benefit mentioned above and $5.6 million of non-cash fixed asset impairment charges, primarily at Arden B. Operating income in the prior year included the $3.7 million "breakage" benefit noted above and $5.5 million in non-cash asset impairment charges, comprised of $3.5 million for the Arden B goodwill impairment also noted above and $2.0 million for other long-lived assets. • Net income was $30.2 million, or $0.30 per diluted share, as compared to $23.2 million, or $0.23 per diluted share, in 2007. The current year results included $1.9 million in non-cash interest charges associated with a June 2008 conversion of $3.4 million of the Company's Secured Convertible Notes into Class A common stock. Excluding this interest charge as well as the above mentioned $5.6 million non-cash asset impairment charges and $0.9 million "breakage" benefit, net income for 2008 was $36.8 million, or $0.37 per diluted share. For 2007, excluding the above mentioned $5.5 million non-cash asset impairment charges and $3.7 million "breakage" benefit, net income was $25.0 million, or $0.25 per diluted share.
Store Openings The Company opened 3 and closed 3 Wet Seal stores during the quarter. The Company also closed 4 Arden B stores during the quarter. At January 31, 2009, the Company operated 496 stores in 47 states, the District of Columbia and Puerto Rico, including 409 Wet Seal stores and 87 Arden B stores.
Capital Expenditures and Depreciation During 2008, the Company incurred capital expenditures of $22.7 million, of which $19.0 million was for construction of new stores and remodels of existing stores. The Company recognized tenant improvement allowances of $3.2 million associated primarily with new store construction, resulting in net capital expenditures for the year of $19.5 million.
Depreciation in the fourth quarter and full year fiscal 2008 totaled $3.7 million and $14.5 million, respectively.
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