This summary is based on the fourth quarter fiscal 2006 earnings call conducted by The Wet Seal, Inc. (WTSLA) on March 29, 2007.
Key Investors Issues
- Net sales were $166.4 million compared to $141.4 million a year ago.
- Loss attributable to the common shareholder was $5.7 million from a loss of $2.9 million last year.
- Revenue was $166.4 million compared to $141.4 million a year ago.
Fourth Quarter Highlights
The company achieved non-GAAP operating income of $8.8 million, an increase from the $8.2 million achieved last year.
These results compare to most recent guidance that indicated adjusted operating income of $7.7 million to $8.7 million.
-Adjusted net income was $9.2 million versus $7.8 million in the fourth quarter last year, an improvement of 18%.
- Comparable store sales increased 3.1% on top of a 44.6% increase last year.
The growth in internet sales at almost 2.5 times was beyond expectations.
From merchandise perspective at the Wet Seal division, the company saw sales growth in dresses, woven tops and shoes. Although, disappointed with sweater business, the company continued to see growth in tops to bottom ratio with strength coming from fashion knits and woven tops.
In February, the company reported a 5% comparable store sales increase.
This was on top of the 29.3% increase reported last year.
The company ended the fourth quarter with a yearend increase in total inventories of $8.7 million and an inventory balance of $34.2 million.
About one-third of the increase represents provisioning for new stores opened or those to be opened in the first quarter. A part of this increase in inventory was up from weaker than anticipated sales plan in December.
The company has 31 signed or approved deals with another 25 deals after landlord approval.
The company anticipates it will not renew about 10 leases that are expiring. That will leave the company with 52 to 68 net new storages. The company has an incremental 1 million or 1 cent per share in new store pre-opening cost in this year’s first quarter.
- The company announced that Board of Directors approved additional repurchases of common stock of up to 4 million shares.
Net sales were $166.4 million, an increase of 17.7% on a 3.1% increase in comparable store sales.
Consistent with the National Retail Federation calendar, fiscal 2006 included an extra week in the fourth quarter and this added $9.4 million in sales to the total. Determining the change in comparable store sale, the calendars were aligned so that the fourth quarter comparison is against the same 14-week period in the prior year. Contributing to the increase in total sales were the 30 net new stores opened this year and the growth seen in internet business. Internet sales more than doubled in the fourth quarter.
There was a 1.6% increase in the combined transaction comparable store sales per store after removing the effect of the extra week of sales due to the calendar shift.
Average unit retails were down 5.9% at a combined $11.93. The quarter-over-quarter decrease in AURs diminished from the 13.8% reduction reported in third quarter.
