The Wet Seal Inc.
) is geared to reduce its operating costs after posting wider
year-over-year losses in the fourth quarter of fiscal 2013. As
part of this strategy, the company is reducing the compensation
paid to its board of directors. Moreover, it has decided to
shrink the size of its Board in the upcoming election to be held
during the annual meeting.
Wet Seal, which currently carries a Zacks Rank #4 (Sell) has
been witnessing lower traffic in its stores for the past few
months. In fact, the company has reduced its fiscal 2013 guidance
twice in view of thebcontinued under-average performance of its
stores. Moreover, it posted loss of 23 cents much wider than
management's guidance of a loss of 14 to 17 cents per share
during the fourth quarter.
Net sales missed year-ago results and the Zacks Consensus
Estimate by 22.8% and 4.7%, respectively, due to 16.5% lower
comparable store sales (comps) during the quarter. Gross margin
shrank 600 basis points due to soft sales.
Ice storms that affected the Southeast region of America
resulted in extreme cold weather during January and February. The
after-effect continued well into March, which disrupted shopping
trends. Moreover, continued sluggishness in consumer
discretionary spending, increased unemployment among youth and
unseasonably cold weather are lowering comps.
Wet Seal has undertaken several cost cutting initiatives to
turn around its margins. The company has been successful in
reducing its cost by approximately $2.5 million in fiscal
2013 for store labor through staffing efficiency measures and
about $2.1 million for several other cost savings plans.
Some better-ranked stock in the consumer staples sector worth
Diamond Foods Inc.
). All the stocks carry a Zacks Rank #2 (Buy).
DIAMOND FOODS (DMND): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
SUPERVALU INC (SVU): Free Stock Analysis
WET SEAL INC -A (WTSL): Free Stock Analysis
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