Improvement in the Arden B. division helped contemporary apparel retailer The Wet Seal Inc. beat analysts’ fourth-quarter earnings expectations despite tepid sales.
The Foothill Ranch, Calif.-based retailer said Thursday that, for the period ended Jan. 30, it registered net income of $80.8 million, or 79 cents a diluted share, compared with income of $4.3 million, or 4 cents, in the year-ago quarter. Excluding a tax benefit in the most recent quarter and impairment charges in the prior-year period, earnings per share was 10 cents a share, 2 cents above the analyst consensus published by Yahoo Finance, versus 9 cents in the 2008 quarter.
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Revenues dropped 2.5 percent to $151 million, from $154.9 million, a year earlier. Wet Seal’s sales were down 3.1 percent to $126.6 million, as revenue increased 0.7 percent to $24.4 million at Arden B. Comparable-store sales declined 4.5 percent, increasing 8.8 percent at Arden B. and decreasing 6.7 percent at the retailer’s namesake chain. Gross margin as a percentage of sales across both brands improved to 31.4 percent for the quarter, versus year-ago levels of 30.9 percent, aided by promotional planning and cost controls.
On the conference call, Ed Thomas, chief executive officer, declared the Wet Seal division’s merchandising problems to be in the past, and called last year a “turning point” for Arden B., which recently lowered its prices 25 to 30 percent after upgrading its collection.
For the year, the Wet Seal posted net income of $93.4 million, or 92 cents a diluted share, more than triple the $30.2 million, or 30 cents a share, reported for 2008. Revenue contracted 5.4 percent to $560.9 million from $593 million.
It expects EPS of 4 cents to 5 cents in the first quarter with comps up 2 to 4 percent. It plans 25 to 40 stores this year on top of its current unit count of 504.