QUOTE AND NEWS
TheStreet.com  May 28  Comment 
NEW YORK (TheStreet) -- Wet Seal  stock is tumbling today after reporting first-quarter revenue below estimates and guiding for continued declines in its current quarter. By late afternoon, the nano-cap had dropped 12.6% to 88.3 cents.  Over...
SeekingAlpha  May 28  Comment 
The Wet Seal, Inc. (WTSL) Q1 2014 Results Earnings Conference Call May 27, 2014 4:30 PM ET Executives Christine Greany - The Blueshirt Group John Goodman - Chief Executive Officer Steve Benrubi - Chief Financial Officer ...
SeekingAlpha  May 1  Comment 
By Atlanta Equity Professional: With its strong cash position, large P/S and P/B discounts, and tangible plans for a sales turnaround, I think that Wet Seal (WTSL) right now offers one of the most intriguing opportunities of the year in the retail...
Wall Street Journal  Apr 25  Comment 
Wet Seal said it would begin winding down its Arden B brand as the retailer turns its attention to shoring up its namesake brand amid falling sales.
OilVoice  Apr 9  Comment 
John Crane has won a fiveyear contract covering management of wet seal inventory technical support and the placement of engineers onsite at Shell Jurong Island. This contract is in addition to the
DailyFinance  Apr 8  Comment 
John Crane has won a five-year contract covering management of wet seal inventory, technical support and the placement of engineers on-site at Shell Jurong Island. This contract is in addition to the five-year global...
StreetInsider.com  Apr 8  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Management+Changes/The+Wet+Seal%2C+Inc.+%28WTSL%29+Cuts+Director+Pay%2C+Will+Reduce+Board+Size/9360412.html for the full story.
DailyFinance  Apr 7  Comment 
The Wet Seal, Inc., a leading specialty retailer to young women, today announced that the Board has decided to reduce the cash compensation for its Directors by 20% for the remainder of fiscal 2014 and to reduce the number of...
SeekingAlpha  Mar 29  Comment 
By Markus Aarnio: The Wet Seal (WTSL) operates stores that sell fashionable and contemporary apparel and accessory items for female customers. (click to enlarge) Insider buying during the last 30 days Here is a table of Wet Seal's...
SeekingAlpha  Mar 27  Comment 
By Micro-Cap Gem Finder: The Wet Seal Inc. (WTSL) lost 13% to close at $1.55 after reporting 4Q and FY 2013 earnings on Thursday, March 20, 2014. The stock lost an additional 40% to close at $1.11 on Tuesday, March 25, 2014. The sell-off occurred...




 

Wet Seal (NYSE: WTSLA) sells clothes for teenagers and young women, operating two mall-based chains of retail stores in the United States under the names Wet Seal and Arden B. The Wet Seal private label brand targets 13 to 19 year old females, while Arden B. stores target 25 to 35 year-old women. The company also operates e-commerce websites for each of the two chains. The company operates 504 stores in 47 states.

Wet Seal counts on the second half of its fiscal year to provide a boost in sales, as its junior customers shop for the back-to-school season in the third quarter and as consumers shop for gifts in the holiday season in the fourth quarter.[1] Wet Seal earns about half of its annual net income during the fourth quarter. During slow economic times, consumers are less willing to spend money on discretionary purchases, especially during the holiday season. It is critical that Wet Seal maintain strong holiday season sales, otherwise their bottom line will struggle. In 2009, the company's net sales fell 5.4% due to decreased customer traffic.[2]

Company Overview

Wet Seal is a specialty women's apparel retailer. The company targets different age ranges within the women's apparel market through its two separate chains, Wet Seal and Arden B., which each sell their own private branded merchandise. Wet Seal offers fashionable and contemporary apparel and accessories designed for juniors (female teenagers from 13 to 19 years old). Arden B. targets 25 to 35 year old women with fashionable apparel and accessories that its customers can wear during the workweek or in more casual situations on the weekend.

Retail and Direct Channel Operations[3][4]

  • Wet Seal: Wet Seal operates 424 of its namesake store locations in the United States. Wet Seal offers a variety of fashionable apparel, accessories and related merchandise designed for 13 to 19 year old teenage females ("juniors") under the Wet Seal private brand. In addition to the 424 Wet Seal store locations, the company operates a Wet Seal e-commerce website to serve customers through a direct channel.
  • Arden B: the company operates 80 Arden B. domestic store locations. Arden B. targets 25 to 35 year old women with fashionable apparel, accessories and related merchandise that its customers can wear to work during the week or in casual situations on the weekend. The growing popularity of "fast-fashion" stores such as H&M and Zara has created strong competition for Arden B, contributing to its poor financial performance.

Business Growth

FY 2009 (ended January 30, 2010)[2]

  • Net sales fell 5.4% to $561 million. Comparable store sales company-wide fell 7.1%, with an 8.5% decline at Wet Seal stores, which was offset by a 0.2% increase at Arden B stores.
  • Net income more than tripled to $93 million. However, this includes the reversal of the valuation allowance against the net deferred tax assets in the amount of $71.3 million, recorded to (benefit) provision for income taxes. Without the benefit, net income was $21.7 million, a 28% decline.
  • Comparable store sales growth declined every single month in 2009. The largest decreases were during the winter and summer months.[5]
  • The company opened 8 new net stores in 2009. The company expects to open 25-40 Wet Seal stores and does not plan to change the number of Arden B stores in 2010.[4]

Trends and Forces

Back-to-School and Holiday Shopping Threatened By Weak Economy

Due to the surge of shopping in the second half of the fiscal year created by the back-to-school and holiday season, Wet Seal's performance in the third and fourth quarters are incredibly important to the company's success -- the fourth quarter alone accounts for nearly half of the company's annual net income.[1]

  • Back-to-School: Since the majority of the company's sales come from the Wet Seal chain, whose customers range from 13 to 19 years old, most of the company's revenue comes from sales to junior high and high school students. As such Wet Seal experiences a significant boost in sales during the end of summer as students shop in preparation for school. The back-to-school shopping season also boosts sales for Wet Seal's competitors such as Abercrombie & Fitch, American Eagle Outfitters and Aeropostale. Most of the back-to-school sales are included in the third fiscal quarter, during which comparable store sales fell 7.6% in 2009.[6]
  • Holiday Season: The retail industry typically sees a large boost in sales leading up to the holidays in November and December. Wet Seal is no different, as the company's fourth quarter sales account for nearly half of the company's net income. A lackluster performance during the holiday season can leave a retailer with surplus merchandise to markdown which impinges upon profitability. In 2009, the company reported comparable store sales decline of 6.7%.[1]

Growing E-commerce Business with The Runway and My Boutique at WetSeal.com

Although the company does not separately disclose sales figures for its e-commerce operations, WTSLA claims that it experienced significant growth in its online sales. In order to drive more traffic to its Wet Seal e-commerce website, WTSLA launched a social networking community on WetSeal.com, with two components labeled "My Boutique" and "The Runway". After creating a free account on the website, users can design and create their own outfits and entire wardrobes, combining various pieces of Wet Seal apparel with accessories. Users can then publish their designs and the community rates these outfits and has the option of purchasing these sets of merchandise through the Wet Seal e-commerce store. "The Runway" also allows users to message each other to discuss different outfits, designs, fashion and other topics. "My Boutique" and "The Runway" could help WTSLA to capitalize on the growing trend of social networking amongst teens, a segment where studies have shown regular usage of social networking sites by approximately 70% of girls ages 15-17 years.

Struggles with Arden B Are Pushing Down Profits

Arden B. has been trying to find a place for itself in the women's apparel market, as young women have been shopping at boutiques and fast-fashion stores such as H&M and Zara, where they can find clothing that is modeled after designer pieces seen on runways in Europe. In 2009 comparable store sales at Arden B stores declined every single month, with double digit declines during the summer months. Wet Seal has taken action to mitigate the losses from Arden B stores by closing several locations. Over two years the company has closed 15 stores, and does not plan to open any in 2010.

Competition

Wet Seal, Inc. competes with many other retailers in the women's apparel market. While Wet Seal vies for the favor of teenage girls with industry heavyweights such as Abercrombie & Fitch Company (ANF), Arden B. competes with retailers, such as Gap and Banana Republic, AnnTaylor and Chico's FAS (CHS), as well as department stores such as Nordstrom, for the 25 to 35 year old woman's purse.

Wet Seal is a small player in the women's apparel retail market, compared to Abercrombie & Fitch Company (ANF) and AnnTaylor Stores (ANN).

Wet Seal competes with other specialty youth apparel retailers:

Arden B. competes with other women's apparel retailers and department stores:

References

  1. 1.0 1.1 1.2 WTSLA Q4 2009 Report
  2. 2.0 2.1 WTSLA 2009 10-K "Selected Financial Data" pg. 25
  3. WTSLA 2009 10-K "Business Segments" pg. 2
  4. 4.0 4.1 WTSLA 2009 10-K "Our Stores" pg. 2
  5. WTSLA 2009 10-K pg. 5
  6. WTSLA Q3 2009 Report
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki