Largest comparable store sales increase at Wet Seal
The Wet Seal Inc, a leading specialty retailer to young women, announced results for its fiscal first quarter ended April 30, 2011, and introduced guidance for the second quarter of fiscal 2011.
For the first quarter:
• Net sales for the quarter ended April 30, 2011, were $156.0 million compared to net sales of $137.8 million for the quarter ended May 1, 2010.
• Consolidated comparable store sales increased 7.0%. Comparable store sales for Wet Seal increased 8.3% and for Arden B decreased 0.1%.
• Operating income was $13.3 million, or 8.5% of net sales, compared to $10.0 million, or 7.2% of net sales, in the first quarter of fiscal 2010.
• Prior year first quarter interest expense included a $2.1 million net non-cash charge to write-off unamortized debt discount and deferred financing costs and a $0.7 million conversion inducement charge in connection with conversion of the Company's remaining Secured Convertible Notes and Series C Convertible Preferred Stock.
• Net income was $8.0 million, or $0.08 per diluted share, as compared to $3.1 million, or $0.03 per diluted share, in the prior year quarter. Excluding the impact of the interest charges noted above, net income for the prior year quarter would have been $5.9 million, or $0.06 per diluted share.
• The Company generated cash flows from operations of $17.5 million during the 13 weeks ended April 30, 2011, and ended the quarter with $183.5 million of cash, cash equivalents and short-term investments, and no long-term debt.
Ms. Susan McGalla, Chief Executive Officer of The Wet Seal, Inc., commented, "We are encouraged by the continued strong performance of our business, which began late last year. For the first quarter, we had our largest comparable store sales increase for any fiscal quarter since 2006 and our highest operating income for any fiscal quarter since 2001. We ended the quarter in April with our fifth month of positive comparable store sales in the last six months, reflecting our efforts to improve merchandise content across all categories in both brands."
Ms. McGalla continued, "As of quarter-end, inventory per square foot decreased 1.9% versus the prior year quarter, with Wet Seal down 3.0% and Arden B up 5.1%. We believe our inventory levels and content provide opportunity for continued comparable store sales growth into the second quarter."
Store Openings and Closings
The Company opened five Wet Seal stores and closed one Wet Seal store and closed one Arden B store during the first quarter. At April 30, 2011, the Company operated 536 stores in 47 states and Puerto Rico, including 454 Wet Seal stores and 82 Arden B stores.
Capital Expenditures and Depreciation
During the first quarter, the Company had capital expenditures of $6.0 million, of which $4.9 million was for construction of new stores and remodels of existing stores. Depreciation in the first quarter of fiscal 2011 totaled $4.7 million as compared to $4.0 million in the first quarter of fiscal 2010.