US: Wet Seal deters takeover as swings to Q2 loss
- Q2 loss reaches $12.4m
- Sales down 9.1% to $135.3m
- Company adopts shareholder rights plan
US teen apparel retailer The Wet Seal said it expects a weak performance during the third-quarter, after swinging to a second-quarter net loss as sales fell.
Net loss for the 13 weeks ended 28 July reached US$12.4m, compared to net income of $2.2m the same period last year. Operating loss was $19.5m, compared to operating income of $3.3m last year.
Net sales declined 9.1% to $135.3m, while consolidated comparable store sales fell 11.1%. Comparable store sales for Wet Seal and Arden B slipped 11% and 11.6% respectively.
"These results are well below where we believe the company is capable of performing when we have the right fast fashion merchandise mix in our stores," said chairman Harold Kahn.
Wet Seal has also adopted a “poison pill” shareholder rights plan to defend itself against a potential takeover, a month after Clinton Group urged the teen apparel retailer to sell the company following the departure of CEO Susan McGalla.
Wet Seal said the plan has not been introduced in response to any specific effort to acquire control of the company.
"While the board will continue to have a dialogue with all of our investors and remains open to considering all strategic opportunities available to the business, we are confident that we have the team, resources and strong balance sheet required to successfully implement our strategy," Kahn said.
For the third-quarter, the company estimates net loss per diluted share to be in the range of $0.13 to $0.16, while net sales are forecast to be between $128m and $133m.
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