Wet Seal's Loss Swells

The retailer's results are weighed down by charges.
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Wet Seal


posted a wider fourth-quarter loss as charges pulled down results, though earnings before one-time items beat Wall Street's expectation.

The teen-apparel seller said Thursday that its loss for the period swelled to $5.7 million, or 7 cents a share, from $2.9 million, or 6 cents a share, a year ago.

The results included charges of $11 million tied to the conversion of convertible notes, stock option charges of $3.6 million and a $400,000 asset impairment charge. Excluding the items, Wet Seal would have reported a profit of $9.2 million, or 9 cents a share, for the latest quarter.

Analysts polled by Thomson Financial projected earnings of 8 cents a share, before items.

Wet Seal's revenue rose to $166.4 million from $141.4 million a year ago, in line with analysts' expectation. Same-store sales climbed 3.1%.

"We are encouraged by sales and margins so far in the first quarter, and I have confidence in our merchant teams' abilities to exploit current fashion trends," CEO Joel Waller said in a statement. "Based upon recent trends, we now estimate a March comparable-store sales increase in the high single digits."

Wet Seal forecast first-quarter earnings of 4 cents to 8 cents a share, including a charge of $1.3 million, or 1 cent a share, for stock option costs. The company expects sales of $139 million to $141 million, with a same-store sales rise of 4% to 6%.

Wall Street is looking for first-quarter earnings of 10 cents a share on revenue of $137.5 million

"Our focus in 2007 will be on driving profit margins, and a key component of this process is to maximize inventory efficiency," Waller said.

Shares recently were up a penny to $6.40.