Wet Seal sees continued strength in the tops business
The Wet Seal Inc, a leading specialty retailer to young women, announced results for its fiscal fourth quarter and full year ended January 29, 2011, and introduced guidance for the first quarter of fiscal 2011.
For the fourth quarter:
• Net sales were $165.5 million compared to net sales of $151.0 million for the prior year fourth quarter.
• Consolidated comparable store sales increased 2.3%. Comparable store sales for Wet Seal increased 1.9% and for Arden B increased 4.8%.
• Operating income was $7.6 million, or 4.6% of net sales, compared to $9.6 million, or 6.4% of net sales, in the prior year fourth quarter.
• The current year and prior year quarters included $1.5 million and $0.5 million, respectively, in non-cash asset impairment charges. The current year quarter also included $0.9 million in charges comprised of transition agreement fees for the Company's former chief executive officer and professional fees for hiring the Company's new chief executive officer. Excluding the impact of these charges, operating income would have been $10.0 million, or 6.0% of net sales, in the current year quarter, compared to $10.1 million, or 6.7% of net sales, in the prior year quarter.
• Net income was $5.3 million, or $0.05 per diluted share, as compared to $74.2 million, or $0.73 per diluted share, in the prior year quarter. The current year quarter included an effective income tax rate of 32%, which was less than the originally planned effective income tax rate of 40%. The prior year quarter included a non-cash tax benefit to reverse the Company's deferred tax valuation allowance of $64.7 million.
• For the fourth quarter of fiscal 2010, excluding the after-tax effect of the $0.9 million charge related to CEO transition costs and the after-tax effect of the $1.5 million asset impairment charge, net income would have been $6.7 million, or $0.07 per diluted share. The adjusted fourth quarter diluted earnings per share of $0.07 also reflects a $0.01 per share benefit from the lower than expected effective tax rate of 32% mentioned above. This exceeded the Company's most recent guidance of $0.04 to $0.05 per diluted share. For the fourth quarter of fiscal 2009, excluding the tax benefit of $64.7 and the after-tax effect of the $0.5 million in asset impairment charges, and presented on a fully-taxed basis, similarly to the fourth quarter fiscal 2010 presentation, net income would have been $6.1 million, or $0.06 per diluted share.
Susan McGalla, the Company's chief executive officer, commented, "Our fourth quarter results reflected growing sales momentum in both operating divisions. At Wet Seal, we saw continued strength in the tops business, its largest merchandise category, and several other key categories, including non-denim bottoms, active wear, dresses and jewelry. At Arden B, we delivered strong results on top of significantly positive sales growth in the prior year, led by excellent performance in our dress category.