Wet Seal Says Weather May Hurt Its Earnings

Wet Seal Inc. said Thursday that first-quarter earnings may be hurt by slow clothing sales caused by “difficult” weather conditions in California.

Traders quickly began selling off the stock, at one point sending it down $7.25 a share, a 20% drop. But it regained some ground later in the day, closing at $32.25, down $3.50, almost 10%.

Nearly 2 million shares changed hands in Nasdaq trading, eight times the average daily volume.

Analysts were expecting the young-women’s apparel retailer to earn 28 cents a share, or about $3 million.

Thomas Tashjian of NationsBanc Montgomery Securities said he cut his estimate to 24 cents a share, from 27 cents. During the same period last year, the 404-store chain earned 25 cents a share, or $2.7 million.

Sales at stores open at least a year will decline about 2% to 3% in the quarter ending next month, analysts said. A year ago, those so-called same-store sales surged almost 15%.

Tashjian, who still rates Wet Seal a “buy,” said earnings for the current quarter should be considered in the context of the company’s overall growth. A year ago, Wet Seal’s first-quarter profit was quadruple the year-earlier figure.

Since then, the company has launched a new catalog and added 20 stores. It is also testing two new retail formats, Arden B and Limbo Lounge.

Company officials didn’t return phone calls seeking comment.