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Wet Seal Upped to Strong Buy

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On Jul 2, 2013, Zacks Investment Research upgraded The Wet Seal Inc. to a Zacks Rank #1 (Strong Buy) following better than expected results in first-quarter of fiscal 2012 and the recent board re-organization.

Why the Upgrade?

On May 29, 2013, Wet Seal reported encouraging first-quarter fiscal 2013 results where it posted adjusted earnings of 1 cent per share, beating both the prior-year results and the Zacks Consensus Estimate. Earnings were on the upswing because of higher year over year margins which offset sluggish top line results.

After dismal fiscal fourth quarter 2012 results, when Wetseal suffered a loss, the first quarter seems like a promising turnaround for the company, which is encouraging for the investors. Wet Seal, which operates through two nationwide, primarily mall-based chains of retail stores - Wet Seal and Arden B isknown for its lower-end apparel for teens and young women. It managed to post an operating income of $3.2 million in the first quarter, much better than an operating loss of $0.4 million in the first-quarter of fiscal 2012 also mention the fourt quarter operating loss here

Estimates were mostly revised following the encouraging first quarter results, The Zacks Consensus Estimate for fiscal 2013 increased from a loss of 11 cents to earnings of 8 cents per share over the last 60 days.

Wet Seal recently made a number of changes in its executive board after suffering a loss in the last two quarters of fiscal 2012. It appointed John D. Goodman as its new Chief Executive Officer. Mr. Goodman has 25 years of experience with companies like Gap, Inc. (GPS - Free Report) ), Levi Strauss & Co., Mervyn's and Bloomingdale's. The veteran in fashion retailing recently served as the Executive Vice President, Chief Apparel and Home Officer of Sears Holding Corporation ). His rich experience proved good for the company in its turnaround efforts.

It also announced the appointment of Tamara Chamberlain as President of Arden B stores, who previously worked for Bebe stores Inc. . Mr. Chamberlain, with his experience helped Arden B Stores post higher year over year sales after suffering declines for several consecutive months.

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