Jul 5, 2012
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Wet Seal reviews capital plans after stockholder inquiries

Jul 5, 2012

Women's apparel retailer Wet Seal Inc , responding to calls from several shareholders, said it is weighing plans to use its deep cash reserves.

Wet Seal, which also sells accessories such as hats, watches and jewelry, had cash and cash equivalents of $148.1 million as of April 28, representing more than half of the company's market value. The company is valued at $285.8 million, according to Thomson Reuters data.

"The company is referring primarily to the large cash position sitting on the balance sheet," Stephens Inc analyst Travis Williams said.

"Some shareholders would like to see management and the board put some of the excess cash to use in the form of a share repurchase or special dividend."

Wet Seal, which said it regularly conducts such reviews, has not paid out dividends to its shareholders so far.

The retailer said it would consider all factors relevant to the company's capital and cash requirements, including projected cash levels, operating performance, market trading prices and economic trends.

The company, which plans to retain an investment banking firm to assist its evaluation, also reported a larger-than-expected drop in same-store sales for June as e-commerce sales fell 5 percent.

Same-store sales for June fell 9 percent. Analysts on average had expected a fall of 7.7 percent, according to Thomson Reuters I/B/E/S.

The Foothill Ranch, California-based company, which caters primarily to young women, also reaffirmed its second-quarter forecast for a net loss of 3 cents to 6 cents per share. Same-store sales are expected to decline 7 to 11 percent.

The company's shares, which have lost nearly a third of their value in the past year, were up slightly at $3.18 on Thursday on the Nasdaq.

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