Wet Seal ( WTSLA) became the latest fashion victim Thursday. The trendy women's apparel chain said it expects earnings to fall well short of Wall Street's expectations in the second quarter -- marking the second straight day in which an earnings warning from a clothing chain battered the sector. The company, based in Foothill Ranch, Calif., said it expects to post second-quarter earnings of between 12 cents and 14 cents a share, compared with 12 cents in the year-ago period. On average, analysts had expected earnings of 17 cents a share, according to Thomson Financial/First Call. The announcement came just before the markets closed, and the stock promptly tanked, closing down $3.03, or 19%, at $12.68. It remained at that level in afterhours trading. The only detail the company gave in the brief statement was that the past two weeks of sales have been slow, causing comparable-store sales in July to be down in the mid-single-digits. Wet Seal's news followed a similar warning from Hot Topic ( HOTT) on Wednesday. That company, which sells music-inspired clothing to teenagers and was once a hot growth stock, said that
earnings would disappoint. At the same time, Children's Place ( PLCE) also warned, and many apparel stocks have sunk in the last two days amid reports the economy is weakening anew.