On Nov. 16, Wet Seal (NASDAQ:WTSLA) released third-quarter earnings for the period ended Oct. 28.

  • Sales increased by 10.8% to $143.3 million, partially because of the opening of 10 new stores during the quarter and a 7.3% increase in same-store sales.
  • Diluted EPS increased to $0.02 from a negative $0.14 during the previous year, mostly thanks to to higher net profits. But that was partially offset by a 113.2% increase in diluted shares to 101.5 million.
  • For the fourth quarter, earnings are estimated to be $0.09 to $0.12 per diluted share, while total net sales are estimated to be $166 million to $169 million.
  • The CAPS community seems to be divided about Wet Seal, with only 12 of 21 community members thinking that Wet Seal will beat the S&P 500.

(Figures in millions, except per-share data)

Income Statement Highlights

Q3 2006

Q3 2005

Change

Sales

$143.3

$129.3

10.8%

Net Profit

$2.4

($6.5)

N/A

EPS

$0.02

($0.14)

N/A

Diluted Shares

101.5

47.6

113.2%



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

33.59%

30.79%

2.80

Operating Margin

1.42%

0.21%

1.21

Net Margin

1.68%

(4.99%)

6.67

*Expressed in percentage points

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$77.1

$70.2

9.8%

Inventory

$44.6

$38.1

17.3%



Q3 2006

Q3 2005

Change

Accounts Payable

$26.2

$22.4

16.9%

Long-Term Debt

$0.0

$8.0

(100.0%)



Learn the ways of the balance sheet.

Cash Flow Highlights

Wet Seal must have left its cash flow statement on the clothes rack, because it was missing from the press release.

Find out why Fools always follow the money.

Related Companies:

  • American Eagle (NASDAQ:AEOS)
  • Gap (NYSE:GPS)
  • Alloy (NASDAQ:ALOY)

Related Foolishness:

Gap is both a Stock Advisor and an Inside Value recommendation, while American Eagle is a Stock Advisor pick.

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