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Wet Seal sales in January drop more than expected

NEW YORK (AP) -- Wet Seal Inc. said Thursday that its revenue at stores open at least a year dropped 9.4 percent for January, which was a steeper decline than Wall Street expected.

Analysts polled by Thomson Reuters expected a drop of 2.3 percent. Comparable store sales are a key indicator of a retailer's health because it excludes the volatility of newly opened and closed locations.

The struggling teen retailer, based in Foothill Ranch, Calif., said same-store sales rose 22.8 percent at its Arden B chain but dropped 13.4 percent at its much larger namesake chain. That was on top of a 13 percent decline for Wet Seal stores in the year-ago period.

Although sales at Wet Seal stores were strong in the first week of January, the company said business slowed considerably over the course of the month as transactions declined. The company said it responded by offering "aggressive promotional and clearance strategies" that enabled it to end the fiscal year with a clean inventory. For its fiscal fourth quarter, sales at stores open at least a year fell 8.3 percent.

For the five-week period ended Feb. 2, the company said total sales were $40 million, a 23 percent increase from a year ago.

Online sales, which aren't included in the sales figure, rose 29.8 percent in January, reflecting the benefit of an extra week in the fiscal month. Excluding the impact of the extra week, online sales rose 6.5 percent in January.

Wet Seal says it still estimates a fourth-quarter loss of 6 cents per share, not including one-time charges. As previously noted, the company expects to incur $1.3 million in severance charges for layoffs. It said it will also will incur a charge upon the early termination of banker retention agreements and that it is evaluating several Wet Seal and Arden B stores for potential non-cash asset impairments.

The company noted that it now plans to discontinue monthly sales reporting.

Shares of Wet Seal, which has 530 stores, were flat at $2.87 in premarket trading.