Wet Seal Lowers Q3 Outlook On Weak Mall Traffic, Shares Tumble

(RTTNews) - Wet Seal Inc. (WTSL), a specialty retailer to young women, on Tuesday lowered its financial guidance for the third quarter, citing an increasingly promotional competitive environment due to weak mall traffic. The company now forecasts a wider net loss for the third quarter. Shares of the company tumbled more than 8 percent in extended trades.

For the third quarter, Foothill Ranch, California-based Wet Seal now expects to report comparable store sales increase in the low-single digits and net loss per share in a range of $0.10 to $0.12, before non-cash asset impairments. Earlier, the company forecast comparable store sales to increase in the mid-single digits and net loss per share in a range of $0.02 to $0.03, before non-cash asset impairments.

On average, analysts polled by Thomson Reuters expect the company to report loss per share of $0.02 for the quarter on revenues of $1113888.31 million. Analysts' estimates typically exclude special items.

John Goodman, CEO of Wet Seal, said, "Following our strong start to the quarter, mall traffic softened considerably during September and has continued into October, resulting in an increasingly promotional competitive environment in recent weeks. We expect to deliver improvement in most key financial metrics versus the year ago period, but the need to implement more extensive promotions than planned has caused us to lower our margin and earnings expectations for the quarter."

Goodman added that despite the tough market conditions, Wet Seal was encouraged by continued expectations of positive comp store sales and substantial improvement in merchandise margin on a year-over-year basis.

Wet Seal will report sales results for the third quarter on November 7 and expects to report full financial results for the quarter on November 25.

WTSL closed Tuesday's regular trading session at $3.84, down $0.05 or 1.29 percent on a volume of 984,867 shares. In after-hours, the stock further declined $0.34 or 8.85 percent to $3.50.