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UPDATE 1-Wet Seal forecasts weak 3rd-qtr, adopts shareholder rights plan
August 21, 2012 / 9:57 PM / 5 years ago

UPDATE 1-Wet Seal forecasts weak 3rd-qtr, adopts shareholder rights plan

* Second-quarter adjusted loss/share $0.07 in line with estimates

* Second-quarter revenue falls 9 percent to $135.3 mln vs est. $136.6 mln

* Sees third-quarter loss/share $0.13-$0.16 vs est. $0.01

* Sees third-quarter revenue $128-$133 mln vs est. $144.4 mln

* Shareholder rights plan trigger set at 10 pct of Class A common stock

Aug 21 (Reuters) - Wet Seal Inc forecast a weak third quarter as it struggles to woo shoppers and the women’s apparel retailer adopted a shareholder rights plan about a month after a top investor called for a sale of the company.

The company, which on Tuesday also posted a second-quarter loss, is moving back to fast-fashion retailing - maintaining light inventories to respond faster to new styles and trends - following 12 consecutive months of same-store sales decline.

Asset management firm Clinton Group, one of Wet Seal’s top shareholders, had called for the sale of the company in July after Wet Seal fired Chief Executive Susan McGalla.

The rights plan, which is scheduled to expire on June 30, 2013, will trigger if a person or group acquires 10 percent or more of the outstanding Class A common stock or announces a tender offer for 10 percent or more of the Class A common stock.

For the third quarter, Wet Seal, the parent of its namesake stores and the Arden B chain, expects to post a loss of between 13 and 16 cents per share, on revenue of between $128 million and $133 million.

Analysts on average were expecting a loss of 1 cent per share on revenue of $144.4 million, according to Thomson Reuters I/B/E/S.

The company posted a loss of 7 cents per share, excluding items, for the second quarter, while revenue fell 9 percent to $135.3 million. Analysts on average had expected a loss of 7 cents per share on revenue of $136.6 million.

Shares of the Foothill Ranch, California-based company closed at $3.06 on the Nasdaq on Tuesday.

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