Successive quarter for Arden B brand - Wet Seal
The Wet Seal, Inc. a leading specialty retailer to young women, announced results for its fiscal third quarter ended October 31, 2009, and introduced guidance for the fourth quarter of fiscal 2009. The Company provides segment information on Wet Seal and Arden B in Exhibit B to this press release.
For the third quarter:
• Net sales were $141.5 million compared to net sales of $146.6 million for the prior year third quarter.
• Consolidated comparable store sales decreased 6.2%. Comparable store sales for Wet Seal decreased 7.6% and for Arden B increased 1.3%.
• Operating income was $4.7 million, or 3.3% of net sales, compared to $7.1 million, or 4.8% of net sales, in the prior year third quarter.
• The current year and prior year quarters included $0.3 million and $0.5 million, respectively, in non-cash asset impairment charges.
• Net income was $4.5 million, or $0.04 per diluted share, as compared to $6.8 million, or $0.07 per diluted share, in the prior year quarter.
Ed Thomas, chief executive officer, commented, "Our third quarter results reflect further progress at both our Wet Seal and Arden B divisions. At Wet Seal, comparable store sales improved sequentially as we continued to adjust our inventory mix to better align with our customers' preferences. We believe that we are better positioned than at any other time this year with our merchandise assortment at Wet Seal.
"At Arden B, our positive comparable store sales and merchandise margin improvements led to operating income of $1.4 million, an improvement of more than $3.7 million over the operating loss incurred in the prior year quarter. With three successive quarters of profitability at Arden B, we gained further confidence in the growth potential of this business under the lower-priced merchandise model we implemented at the beginning of the year."
Mr. Thomas concluded, "Although we are pleased with our progress in the third quarter, we have seen a notable decline in comparable store sales trends during the first half of November, versus October results, in both of our operating divisions. We believe, at a minimum, that the consumer is taking a pause after Halloween and before the start of the holiday shopping season. With this ongoing situation, we will continue to manage our business very conservatively."
As of quarter-end, the Company's inventory per square foot declined 4% versus the prior year quarter, with Wet Seal down 4% and Arden B down 2%.
The Company generated cash flows from operations of $6.5 million during the third quarter, and ended the quarter with $144.2 million of cash and cash equivalents and $3.3 million of long-term debt, comprised of Convertible Notes, net of discount.
Store Openings and Closings
The Company opened six Wet Seal stores and closed one, and closed one Arden B store during the third quarter. At October 31, 2009, the Company operated 500 stores in 47 states, the District of Columbia and Puerto Rico, including 420 Wet Seal stores and 80 Arden B stores.