Why The Wet Seal Inc. Shares Got Dumped

Why The Wet Seal Inc. Shares Got Dumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of The Wet Seal, Inc. were tanking today, falling as much as 21% after a disappointing earnings report.

So what: The women's fashion chain reported an adjusted loss of $0.12 a share, in line with expectations, as revenue fell 6% to $127.7 million, missing estimates at $130.8 million. Comparable sales moved up 0.8%, but Wet Seal's outlook for the fourth quarter also turned off investors. CEO John Goodman said, "We've had a challenging start to the season, reflecting the difficult macro environment and ongoing softness in mall traffic."

Now what: For the holiday quarter, management projects a loss between $0.14 and $0.17 per share, well below the penny per-share profit that analysts had expected. It also sees revenue at just $134 million to $137 million, and comparable sales falling near 10%. The consensus revenue estimate had been $154.5 million. Shares of apparel retailers have been falling across the board this week as Black Friday weekend sales were below the market's expectation, so Wet Seal may be just the victim of industrywide downturn. Still, it's hard to get behind a retailer expecting a loss for the holiday quarter.

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The article Why The Wet Seal Inc. Shares Got Dumped originally appeared on Fool.com.

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