Debt Charges Sink Wet Seal

For the full year, Wet Seal estimated charges related to "performance shares" will total $11 million, and charges for stock options and restricted stock will be $5.3 million.

"However, such charges may vary considerably as a result of changes in the company's stock price," the company said.

During the quarter, the retailer opened two Wet Seal stores and closed one Wet Seal store. It recently operated a total of 309 Wet Seal stores and 92 Arden B stores.

"Our operating-income rate substantially exceeded our expectations and resulted from growth in merchandise margins, leverage from additional sales and improvements in almost every component of our selling and general and administrative expenses," Wet Seal said. "Our operation is running smoothly, and we are continually finding ways to improve our efficiency and reduce costs. We are on track to open 20 to 25 stores this year with the full expectation we can accelerate square-footage growth beginning in 2007."