Wet Seal's 1st-quarter results beat expectations

FOOTHILL RANCH, Calif. (AP) -- The Wet Seal Inc. reported Tuesday that its fiscal first-quarter profit and revenue met or even came in ahead of market expectations, signaling that the teen retailer's turnaround may be paying off.

The clothing retailer earned $3.1 million, or 3 cents per share, for the quarter that ended May 4. That's compared with a net loss of $273,000, or break-even on a per-share basis, in the prior year. On an adjusted basis, it earned 1 cent per share, down from 2 cents per share last year.

Its revenue slipped to $140.4 million from $147.9 million last year.

Analysts polled by FactSet were anticipating that the company would earn a penny per share for the quarter on revenue of $140.3 million.

The retailer's revenue from stores open at least a year fell 2.9 percent, which includes a 3.4 percent drop at Wet Seal and a 0.9 percent increase at Arden B. This is considered a key indicator of a retailer's financial performance as it strips away the impact of recently opened or closed stores.

Wet Seal's CEO John Goodman said that improved merchandise, marketing and inventory management helped drive the gains. The teen retailer is trying to turn around its business after an extended period of weak sales, bringing in Goodman as its new CEO to lead the effort, which has included trimming jobs and weaker stores.

"We have effectively stabilized the business," Goodman said. "We are seeing an increasingly strong response to our product offerings and customer engagement strategies, while at the same time, we have closely managed inventory and significantly improved our merchandise margin."

For the second quarter, Wet Seal expects earnings per share in the range of break-even to 2 cents per share and revenue between $138 million and $141 million. Analysts had forecast a loss of 2 cents per share for the period on revenue of $131.9 million. It also expects sales in stores open at least a year to grow in the mid-single-digit range.

The company, headquartered in Foothill Ranch, Calif., has 526 stores across the U.S.

Shares of Wet Seal jumped more than 4 percent to $4.69 in after-hours trading on the news. Its stock closed regular trading unchanged for the day at $4.50, despite broader market gains.