Foothill Ranch, Calif., Wet Seal Inc. reported a loss of $35 million, or 87? per share, for the second quarter compared with $106.3 million, or $3.31 per share, last year. The results include a $16.1 million charge for a consulting agreement with Michael Gold, whom the struggling specialty retailer has hired to turn around its sales picture. Second-quarter sales increased 19.5% to $126.3 million from $105.7 million last year.
Wet Seal’s results for the quarter also include $23.3 million in deemed, noncash preferred stock dividends related to its $24.6 million equity-financing deal in May.
“Our accelerated sales growth and operating margins improvement have led to a significant improvement in operating results,” said Joel Waller, CEO, Wet Seal.
Wet Seal, which has been in the red since fiscal 2003, warned as recently as June that it could be forced to seek Chapter 11 bankruptcy protection if its operating losses and negative cash flow continued. In May, the company closed an equity financing deal to raise additional funds. The financing, along with growth in same-store sales and better operating margins, has significantly improved the chain’s liquidity, according to Waller.