Earnings Scorecard: Wet Seal - Analyst Blog
April 04 2011 - 2:15PM
Zacks
On March 25, 2011, specialty retailer Wet Seal
Inc. (WTSLA) announced its financial results for
the fourth-quarter and year-end 2010.
Street analysts had more than a week to ponder on the news. In
the paragraphs that follow, we cover the recent earnings
announcement, subsequent analysts’ estimate revisions as well as
the Zacks Rank and long-term recommendation for the stock.
Earnings Review
The company reported earnings of 7 cents a share which surpassed
the Zacks Consensus Estimate of 4 cents by 75%.Earnings also
outpaced the prior year’s profit of 6 cents a share.
Net sales for the quarter grew 9.6% year over year to $165.5
million. Consolidated comparable store sales increased 2.3% during
the quarter.
Net sales of the Wet Seal segment surged 9.5% to $138.7 million
for the quarter, while comparable sales increased 1.9%. For the
Arden B segment, net sales grew 10.0% to $26.8 million, while
comparable same-store sales increased 4.8%.
(Read our full coverage on this earnings report: Wet Seal
Outpaces Ests
Agreement of Estimate Revisions
The strong performance of the company during the fourth-quarter
2010 has made one analyst move his estimates up for the first and
second quarters of fiscal 2011. The analyst has also moved his
estimate upward for fiscal 2012 in the past 7 days.
Magnitude of Estimate Revisions
However, with not many analysts moving their estimates upward in
the past one week, the Zacks Consensus Estimates, for the first and
second quarters of fiscal 2011 has remained at 6 and 3 cents,
respectively. For fiscal 2012, the estimates have moved up
marginally to 22 cents from 21 cents earlier.
Our Recommendation
Our long-term recommendation on Wet Sealis Neutral as we
anticipate it to perform in line with the broader market. Wet Seal
focuses on improving its current stores which should lead to more
profitable results in the coming quarters.
These improvements include a better product mix at the store
level to reflect local demographics; moving stores to off-mall
locations; being more aggressive with its markdowns when its
fashion choices aren’t popular; and upgrading store designs and
fixtures.
However, intense competition from other discounters and
department stores and seasonal nature of the company’s business
severely undermine the company’s future growth prospects and
sustainability. This leaves limited space for above-market
performance of the company.
The company faces stiff competition from BEBE Stores
Inc. (BEBE). It currently holds a Zacks #3 Rank. On a
long-term basis, we maintain a Neutral rating on the stock, with a
short-term Hold rating.
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30
years ago that earnings estimate revisions are the most powerful
force impacting stock prices. He turned this ground breaking
discovery into two of the most celebrating stock rating systems in
use today. The Zacks Rank for stock trading in a 1 to 3 month time
horizon and the Zacks Recommendation for long-term investing (6+
months). These “Earnings Estimate Scorecard” articles help analyze
the important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at:
http://www.zacks.com/education/
BEBE STORES INC (BEBE): Free Stock Analysis Report
WET SEAL INC -A (WTSLA): Free Stock Analysis Report
Zacks Investment Research
Bebe Stores (PK) (USOTC:BEBE)
Historical Stock Chart
From Jun 2024 to Jul 2024
Bebe Stores (PK) (USOTC:BEBE)
Historical Stock Chart
From Jul 2023 to Jul 2024