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.
What's the top stock for 2014?
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!
The article Why The Wet Seal Inc. Shares Got Dumped originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.