Fashion apparel retailer Wet Seal's (NASDAQ:WTSLA) slump continued into its fiscal fourth quarter. After the close yesterday, the company reported a net loss of $17.8 million, or $0.60 per share, compared to last year's loss of $5.6 million, or $0.20 per share.

Wet Seal maintains that these losses were expected, and progress is being made. Much of the blame is being placed on troubles from its discontinued Zutopia stores. Excluding those operations, the loss was smaller, at $0.45 per share.

In the earnings release, CEO Peter D. Whitford touted the year's "significant strategic changes that we believe will better position the company for a more promising future." My, that is encouraging. What Whitford so conveniently fails to point out is that much of its strategic changes were forced upon the company when its Arden B executive jumped ship for sexy competitor bebe (NASDAQ:BEBE).

Wet Seal was also hurt by markdowns and a decline in revenues. Net sales for the quarter fell to $143.1 million from $155.6 million. Additionally, same-store sales fell 9.9% -- which is on top of the whopping 18.1% same-store sales plunge in last year's fourth quarter.

The retailer's projecting a rough start for 2004. For the fiscal first quarter, it's anticipating a net loss of between $0.54 and $0.59 per share. Wet Seal maintains that this is in line with its expectations and operating plan. I think it might be time to come up with a new plan, if that's the case.

So, what's the good news? Well, the painful markdowns do seem to be slowly improving its inventory situation. At year's end, inventory levels were 6% below where they were at the same time last year. This could increase the chances for its expected improvements in the fall season.

Wet Seal feels confident with the progress of its turnaround and may in fact be heading in the right direction. However, with so manyretailers, including Urban Outfitters (NASDAQ:URBN) and Pacific Sunwear (NASDAQ:PSUN), reporting strong numbers, it might be best to wait out Wet Seal's transition period.

Want to discuss Wet Seal's prospects for a recovery? Check out the Fool's Retail discussion board.

Motley Fool contributor Mike Cianciolo welcomes feedback. He doesn't own any of the companies in this article.