Here's an example of a company that is not in good shape.

After the bell yesterday, distressed clothing retailer Wet Seal (NASDAQ:WTSLA) racked up even bigger losses. For the third quarter, its net loss from continuing operations almost quadrupled to $24.6 million, or $0.68 per share. And the per-share loss would have been even worse if it wasn't softened by a 21% increase in the company's outstanding shares.

Revenues fell another 16% to $110.8 million on a 12.6% decline in same-store sales. The company also closed another four stores during the quarter, leaving total stores in operation at 558, down from 590 at this time last year.

And Wet Seal's precarious cash situation has only gotten worse. By the end of the quarter, it had only $22.8 million left on its balance sheet. The company did buy itself a few quarters, however: On Nov. 9, while announcing the resignation of Chairman and CEO Peter Whitford, the company announced that it had agreed to sell $40 million in convertible notes at $1.50 per share to S.A.C. Capital -- which already has a stake in the company -- in exchange for a $10 million interim loan.

Wet Seal has been a great example of poor stock performance following poor business performance, a lack of a competitive advantage, and an out-of-favor brand. The stock is in penny territory, hovering near all-time lows at $1.71 per share. And even with new financing, the company offers nothing for investors to get excited about -- Wet Seal also reported November sales this morning, revealing a hardly lackluster 19.5% decline in same-store sales from continuing operations.

So if you're looking to play with a penny stock, don't bother with this one. If you're into teen clothing retailers, at least stick to companies with better brands, such as Gap (NYSE:GPS), Abercrombie & Fitch (NYSE:ANF), American Eagle Outfitters (NASDAQ:AEOS), or Pacific Sunwear (NASDAQ:PSUN).

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Fool contributor Jeff Hwang owns none of the companies mentioned above.