Wet Seal Loss Widens, Warns Of Bankruptcy; Stock Plunges 37% - Update

(RTTNews) - Apparel retailer Wet Seal Inc (WTSL), Wednesday reported a wider loss for the third quarter, hurt by lower revenues and margins.

Wet Seal, which has engaged outside advisors to seek strategic and financial alternatives, indicated that it may file for bankruptcy protection upon failure to meet its immediate liquidity needs.

Following the announcement, Wet Seal shares slid 37 percent in after-hours trade on the Nasdaq.

Wet Seal has been posting successive losses.

The Foothill Ranch, California-based company posted a quarterly net loss of $35.9 million or $0.43 per share, compared with a loss of $14.9 million or $0.15 per share last year.

Excluding items, adjusted loss for the quarter was $0.28 per share, compared with a loss of $0.09 per share a year ago.

On average, three analysts polled by Thomson Reuters estimated a loss of $0.26 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter declined to $104.3 million compared with $114.9 million in the prior year.

Analysts estimated revenues of $97.2 million for the quarter.

Comparable store sales for the quarter slid 14.5 percent, the company said.

Results were further hurt by gross margin that declined to 13.7 percent from 23.8 percent a year ago.

The company's CEO Ed Thomas said, "While our results came in at the low end of our expectations during the third quarter, we continue to take important steps in our efforts to address our financial position and our ongoing challenges."

"A key priority is to address our immediate liquidity needs in the very near term in order for us to have the time and resources to be able to implement our operating strategies."

As previously said, Wet Seal has engaged the services of outside advisors, including Houlihan Lokey and FTI Consulting, to assist it in analyzing potential strategic and financial alternatives, which include consideration of out-of-court restructurings as well as bankruptcy court proceedings to recapitalize or restructure its debts and other obligations.

As of November 1, the company operated 528 stores and expects to close about 60 of those stores by the end of the fourth quarter as their lease terms expire.

WTSL closed Wednesday at $0.28, down 2.99%, on a volume of 951k shares. In after hours, the stock dropped 37.97% at $0.17.