The Wet Seal, Inc. a leading specialty retailer to young women, reported net sales and comparable store sales for the four-week period ended January 30, 2010, or fiscal January, and the fiscal fourth quarter ended January 30, 2010.
Ed Thomas, chief executive officer of The Wet Seal, Inc., commented: “Fourth quarter comparable store sales were in line with our expectations.
“We also ended the year with solid inventory levels in both divisions, as planned, which should provide opportunity for improved comparable store sales performance as we begin fiscal 2010. At Wet Seal, we estimate inventory per square foot increased 6% over the prior year, driven by a much stronger basic denim bottoms position. At Arden B, we estimate inventory per square foot increased 54% over the prior year, a much needed increase after several years of major declines, which should help us build upon our recent positive sales trends. As a result, we estimate inventory per square foot, on a consolidated basis, increased 12% over the prior year.”
Mr. Thomas continued, “We currently estimate fourth quarter earnings will be in the range of $0.08 to $0.09 per diluted share, an improvement from the prior guidance range of $0.06 to $0.07 per diluted share. We generated better than expected merchandise margins at both divisions through careful inventory and promotions management, and maintained strong discipline over costs throughout the quarter, which led to our improved expectations.
“Of further note, we currently expect to reverse our deferred income tax asset valuation allowance as of fiscal year-end, which would generate a non-cash benefit to our provision for income taxes that we estimate to be in excess of $60 million. Our guidance does not include any estimate for this benefit.
“We also remain pleased with our continued balance sheet strength, with nearly $162 million of cash and only $3.5 million of long-term debt as of fiscal year-end.”
During the fourth quarter, investors exercised warrants for 2,727,948 shares of the Company's Class A common stock, generating proceeds to the Company of approximately $7.3 million. As of January 30, 2010, warrants exercisable into 6,092,116 shares of the Company's Class A common stock remain outstanding. The remaining warrants are exercisable at a price of $3.68 per share and expire in November 2010. Exercise of these remaining warrants would result in proceeds to the Company of $22.4 million.
During the fourth quarter, the Company repurchased 2,025,720 shares of its Class A common stock at a total cost, including commissions, of approximately $7.3 million. As of January 30, 2010, the Company has $5.2 million of capacity remaining under a share repurchase program approved by its Board of Directors in November 2009.
Headquartered in Foothill Ranch, California, The Wet Seal, Inc. is a leading specialty retailer of fashionable and contemporary apparel and accessoryitems. As of January 30, 2010, the Company operated a total of 504 stores in 47 states, the District of Columbia and Puerto Rico, including 424 Wet Seal stores and 80 Arden B stores.
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