The Company also announced that it is refocusing on its proven fast fashion merchandising approach to improve overall performance and is implementing several strategic initiatives to enhance shareholder value.
Hal Kahn, Chairman of the Board of The Wet Seal, Inc., said: "The end of the second quarter was the beginning of an important transition period for Wet Seal as we made the decision to return to our core expertise of fast fashion merchandising.
“We began taking aggressive actions to refocus our strategy in a way that we believe will address the issues that resulted in this disappointing quarter. We are returning to merchandising to a broader demographic, including the young teen customer, sourcing a wider variety of product more directly from fast fashion vendors, committing to merchandise purchases closer to time of need, and focusing our price points on our core customer, which long supported success at the Company."
Mr. Kahn added: "As we execute on this return to our core expertise, we expect it will take several months to begin to realize the impact of the transition in our merchandise and in-store marketing.
“So, while we expect continued weak performance through the third quarter, we believe that this trend will bottom out in the coming months and that we will begin to see clear signs of improvement in the fourth quarter — ultimately returning to a level of sales and earnings that this strategy has driven for many years. As a result, we believe the Company will be positioned to stabilize the business during the holiday season and 2013."
For the second quarter:
Net sales totaled $135.3 million versus net sales of $148.8 million in the prior year second quarter.
Consolidated comparable store sales decreased 11.1%; comparable store sales for Wet Seal decreased 11.0% and for Arden B decreased 11.6%.
Operating loss was $19.5 million, or 14.4% of net sales, compared to operating income of $3.3 million, or 2.2% of net sales, in the year-ago quarter. Excluding the effect of non-cash asset impairment charges and estimated CEO severance costs, operating loss totaled $8.6 million in the current year quarter. Excluding the effect of non-cash asset impairment charges, operating income was $4.4 million in the same period last year.
Net loss totaled $12.4 million, or $0.14 per diluted share, as compared to net income of $2.2 million, or $0.02 per diluted share, in the prior year quarter. Excluding the after-tax effect of the non-cash asset impairment charges and estimated CEO severance costs, net loss was $5.8 million, or $0.07 per diluted share, in the current year quarter.
Excluding the after-tax effect of non-cash asset impairment charges, net income totaled $2.8 million, or $0.03 per diluted share, in the year-ago quarter.
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