<PAGE>
THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
---- THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MAY 4, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
---- THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-18632
THE WET SEAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0415940
(State of Incorporation) (I.R.S. Employer Identification No.)
64 FAIRBANKS
IRVINE, CALIFORNIA 92718
(Address of principal executive offices) (Zip code)
(714) 583-9029
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
YES X NO
---
The number of shares outstanding of the registrant's Class A
Common stock and Class B Common stock, par value $.10 per share, at May 31, 1996
were 10,353,566 and 3,157,665, respectively. There were no shares of Preferred
stock, par value $.01 per share, outstanding at May 31, 1996.
<PAGE>
THE WET SEAL, INC.
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of May 4, 1996 (unaudited) and
February 3, 1996...................................................3-4
Consolidated Statements of Income (unaudited) for the 13
weeks ended May 4, 1996 and April 29, 1995...........................5
Consolidated Statements of Cash Flows (unaudited) for the 13
weeks ended May 4, 1996 and April 29, 1995...........................6
Notes to Consolidated Financial Statements.........................7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................10-14
PART II. OTHER INFORMATION...................................................15
SIGNATURE PAGE......................................................16
<PAGE>
THE WET SEAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
May 4, February 3,
1996 1996
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $56,370,000 $57,153,000
Other receivables 81,000 523,000
Merchandise inventories 24,672,000 16,241,000
Prepaid expenses 5,473,000 428,000
Deferred tax charges 1,100,000 1,100,000
----------- ----------
Total current assets 87,696,000 75,445,000
----------- ----------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS:
Leasehold improvements 55,583,000 55,438,000
Furniture, fixtures and equipment 21,798,000 21,606,000
Leasehold rights 4,012,000 2,009,000
Construction in progress -- 9,000
----------- ----------
81,393,000 79,062,000
Less accumulated depreciation (44,159,000) (41,015,000)
----------- ----------
Net equipment and leasehold improvements 37,234,000 38,047,000
----------- ----------
OTHER ASSETS:
Deferred tax charges and other assets 3,439,000 3,461,000
Goodwill, net of accumulated amortization of
$532,000 and $521,000 as of May 4, 1996
and February 3, 1996, respectively 600,000 611,000
----------- ----------
Total other assets 4,039,000 4,072,000
----------- ----------
$128,969,000 $117,564,000
----------- ----------
----------- ----------
</TABLE>
<PAGE>
THE WET SEAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
May 4, February 3,
1996 1996
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $34,351,000 $19,491,000
Accrued liabilities 21,863,000 22,813,000
Income taxes payable 389,000 3,354,000
Current portion of long-term debt 3,736,000 3,736,000
----------- -----------
Total current liabilities 60,339,000 49,394,000
----------- -----------
LONG-TERM LIABILITIES:
Long-term debt 4,764,000 5,264,000
Deferred rent 5,382,000 5,171,000
----------- -----------
Total long-term liabilities 10,146,000 10,435,000
----------- -----------
Total liabilities 70,485,000 59,829,000
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value, authorized
2,000,000 shares; none issued and outstanding -- --
Common Stock, Class A, $.10 par value,
authorized 20,000,000 shares;
6,694,566 and 5,687,066 shares issued and
outstanding at May 4, 1996 and February 3,
1996, respectively 669,000 568,000
Common Stock, Class B Convertible, $.10 par value,
authorized 10,000,000 shares;
5,807,665 and 6,807,665 shares issued and
outstanding at May 4, 1996 and February 3,
1996, respectively 581,000 681,000
Paid-in capital 38,594,000 38,568,000
Retained earnings 18,640,000 17,918,000
----------- -----------
Total Stockholders' Equity 58,484,000 57,735,000
----------- -----------
$128,969,000 $117,564,000
----------- -----------
----------- -----------
</TABLE>
<PAGE>
THE WET SEAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
13 Weeks Ended
----------- -----------
May 4, April 29,
1996 1995
----------- -----------
<S> <C> <C>
SALES $80,575,000 $29,974,000
COST OF SALES, (including buying, distribution
and occupancy costs) 61,537,000 24,197,000
----------- -----------
GROSS MARGIN 19,038,000 5,777,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE 18,264,000 7,140,000
INTEREST INCOME, NET (477,000) (333,000)
----------- -----------
NET OPERATING EXPENSES 17,787,000 6,807,000
----------- -----------
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES 1,251,000 (1,030,000)
PROVISION (BENEFIT) FOR INCOME TAXES 529,000 (359,000)
----------- -----------
NET INCOME (LOSS) $722,000 ($671,000)
----------- -----------
----------- -----------
NET INCOME (LOSS) PER COMMON SHARE $0.06 ($0.05)
----------- -----------
----------- -----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 12,497,842 12,236,602
----------- -----------
----------- -----------
</TABLE>
<PAGE>
THE WET SEAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
13 Weeks Ended
----------- -----------
May 4, April 29,
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $722,000 ($671,000)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 3,178,000 1,870,000
Loss on disposal of equipment and leasehold
improvements 2,000 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Other receivables 442,000 (536,000)
Tax refund receivable -- (393,000)
Merchandise inventories (8,431,000) (1,523,000)
Prepaid expenses (5,045,000) (360,000)
Other assets 22,000 (47,000)
(Decrease) increase in:
Accounts payable and accrued liabilities 13,910,000 2,306,000
Income taxes payable (2,965,000) (237,000)
Deferred rent 211,000 92,000
----------- -----------
Total adjustments 1,324,000 1,172,000
----------- -----------
Net cash provided by operating activities 2,046,000 501,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in equipment and leasehold improvements (2,356,000) (129,000)
----------- -----------
Net cash used in investing activities (2,356,000) (129,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (500,000) --
Proceeds from issuance of stock 27,000 --
----------- -----------
Net cash used in financing activities (473,000) --
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (783,000) 372,000
CASH AND CASH EQUIVALENTS, beginning of period 57,153,000 25,369,000
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $56,370,000 $25,741,000
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (refunded) during the period for:
Interest $172,000 $0
Income taxes, net 3,494,000 271,000
</TABLE>
<PAGE>
THE WET SEAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
The information set forth in these consolidated financial statements is
unaudited except for the February 3, 1996 Balance Sheet. These statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information, the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
The accompanying consolidated financial statements consolidate the accounts
of Contempo Casuals, Inc. ("Contempo") which was acquired on July 1, 1995. All
significant intercompany transactions have been eliminated.
In the opinion of management, all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation have been included. The
results of operations for the 13 weeks ended May 4, 1996 are not necessarily
indicative of the results that may be expected for the year ending February 1,
1997. For further information, refer to the financial statements and notes
thereto included in the Company's Annual Report for the year ended February 3,
1996.
Certain reclassifications have been made to conform the April 29, 1995
financial statements to the May 4, 1996 financial statements.
NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS:
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation" which became effective for the Company beginning February 4, 1996.
SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply APB Opinion No. 25, which
recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25 to
its stock based compensation awards to employees and will disclose the required
pro forma effect on net income and earnings per share.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 3 - LOAN PAYABLE TO BANK AND LINES OF CREDIT:
In June 1995, the Company obtained three new credit facilities with a
bank which consisted of two revolving lines of credit for an aggregate of
$30,000,000 and one term loan for $10,000,000. The borrowings under the two
revolving credit lines bear interest at the bank's prime rate or, at the
Company's option, the London Interbank Offered Rate (LIBOR) plus 1.75% for
the $10,000,000 Wet Seal credit facility and plus 2.00% for the $20,000,000
Contempo credit facility. The Wet Seal facility is guaranteed by Contempo.
The Contempo facility is guaranteed by Wet Seal and is also secured by the
stock of Contempo. As of May 31, 1996 there were no borrowings against either
of the lines.
The Company's five year amortizing term loan in the amount of
$10,000,000 is repayable in twenty equal quarterly installments of $500,000
which commenced October 31, 1995 and is subject to mandatory prepayment
requirements as defined in the agreement. The borrowing bears interest at the
bank's prime rate plus .25% or, at the Company's option, LIBOR plus 2.25%.
The term loan is guaranteed by Contempo. All of the above facilities are
subject to certain financial covenants and conditions with which the Company
was in compliance as of May 4, 1996.
NOTE 4 - EARNINGS PER COMMON SHARE:
Earnings per common share are based on the weighted average number
of shares outstanding during the periods. The effect of Common Stock
equivalents was not significant.
NOTE 5 - FEDERAL AND STATE INCOME TAX:
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," effective January 30, 1993. The
combined federal and state income taxes were calculated using estimated
effective annual statutory tax rates.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 6 - SUBSEQUENT EVENT:
On May 24, 1996 the Company completed its previously announced public
offering of 3,565,000 shares of its Class A Common Stock, of which 765,000
shares were sold by the Company and 2,800,000 were sold by Selling
Stockholders. The shares were sold to the public at an initial offering price
of $20 per share. The net proceeds to the Company from the sale of the
765,000 shares are estimated to be $14,368,000. The proceeds are being used
for general corporate purposes, which may include repayment of certain
indebtedness, remodeling and opening of stores and upgrading of the Company's
point-of-sale system.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
On July 1, 1995, the Company acquired Contempo Casuals. The transaction
was accounted for under the purchase method. The acquisition increased the
number of stores the Company operates by 237 stores. As of May 4, 1996 the
Company operated 362 stores as compared to 133 stores as of April 29, 1995,
the end of the first quarter of fiscal 1995.
Acquiring Contempo Casuals enabled the Company to significantly reduce
fixed expenses as a percentage of sales through the consolidation and
integration of the two companies' management teams, corporate offices and
distribution centers. This process was substantially completed at the time of
the acquisition.
The following discussion and analysis of financial condition and results
of operations include a comparison of the results of operations for the first
quarter of fiscal 1996, which contained the full quarter results of both the
Wet Seal stores and the Contempo Casuals stores, to the first quarter of
fiscal 1995, which contained only the full period results of the Wet Seal
stores due to the fact that the Contempo Casuals acquisition occurred on
July 1, 1995. Therefore, the results of operations for the first quarter of
fiscal 1996 are not directly comparable to the first quarter of fiscal 1995.
Comparable store sales are defined as sales in stores that were open
throughout the full fiscal year and throughout the full prior fiscal year. In
the first quarter of fiscal 1996, comparable store sales included sales
results of Contempo Casuals stores as compared to sales results of Contempo
Casuals stores in the corresponding period in the prior year during which
time Contempo Casuals was under different ownership.
Management's discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and the Notes related thereto.
RESULTS OF OPERATIONS
THE 13 WEEKS ENDED MAY 4, 1996 COMPARED TO THE 13 WEEKS ENDED APRIL 29, 1995.
Sales in the 13 weeks ended May 4, 1996 (first quarter of fiscal 1996)
were $80,575,000 compared to sales in the 13 weeks ended April 29, 1995
(first quarter of fiscal 1995) of $29,974,000, an increase of $50,601,000 or
168.8%. The dollar
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
increase in sales in the first quarter of fiscal 1996 compared to the first
quarter of fiscal 1995 was primarily due to the acquisition of Contempo
Casuals. The increase in sales is also due, to a significantly lesser extent,
to the 4.3% increase in comparable store sales for the combined Wet Seal and
Contempo chains as well as due to a shift in the fiscal calendar. The first
quarter of fiscal 1996 begins and ends one week later than the first quarter
of fiscal 1995 and this shift results in a 'net' stronger 13 weeks of sales
in the first quarter of fiscal 1996 as compared to the 13 weeks of sales in
the first quarter of fiscal 1995.
Cost of sales, including buying, distribution and occupancy costs, was
$61,537,000 in the first quarter of fiscal 1996 compared to $24,197,000 in
the first quarter of fiscal 1995, an increase of $37,340,000 or 154.3%. The
dollar increase in cost of sales was due to the increase in the number of
stores as a result of the acquisition of Contempo Casuals. As a percentage of
sales, cost of sales decreased from 80.7% in the first quarter of fiscal 1995
to 76.4% in the first quarter of fiscal 1996, a decrease of 4.3%. Of the 4.3%
decrease in cost of sales as a percentage of sales, 2.7% related to a
decrease in occupancy costs and 0.8% related to a decrease in the cost of
merchandise. The decrease in occupancy costs was associated primarily with a
decrease in depreciation resulting from the lower net book value per store of
the depreciable assets of Contempo Casuals, as compared to Wet Seal. The
decrease of 0.8% in merchandise cost was due to an increase in the initial
markup rates. The remaining decrease of 0.8% was due to deceases in buying
and distribution center expenses which were primarily the result of the
economies of scale associated with the acquisition of the Contempo Casuals
stores.
Selling, general and administrative expenses were $18,264,000 in the
first quarter of fiscal 1996 compared to $7,140,000 in the first quarter of
fiscal 1995, an increase of $11,124,000 or 155.8%. The dollar increase in
selling, general and administrative expenses was primarily due to the
acquisition of Contempo Casuals which served to substantially increase the
number of stores. As a percentage of sales, selling, general and
administrative expenses decreased from 23.8% in the first quarter of fiscal
1995 to 22.7% in the first quarter of fiscal 1996, a decrease of 1.1%. The
decrease as a percentage of sales was related to the economies of scale the
Company achieved as a result of this acquisition.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
Interest income, net, was $477,000 in the first quarter of fiscal 1996
compared to $333,000 in the first quarter of fiscal 1995, an increase of
$144,000. This increase was due primarily to an increase in the average cash
balance invested. This was offset by interest expense in the first quarter of
fiscal 1996 related to the loan payable.
Income tax provision (benefit) was $529,000 in the first quarter of
fiscal 1996 compared to $(359,000) in the first quarter of fiscal 1995.
Net income was $722,000 in the first quarter of fiscal 1996 compared to
a net loss of $671,000 in the first quarter of fiscal 1995. As a percentage
of sales, net income was 0.9% in the first quarter of fiscal 1996 compared to
a net loss of 2.2% in the first quarter of fiscal 1995. The Company's return
to profitability, which began in the second half of fiscal 1995, was directly
related to the acquisition of Contempo Casuals. With this acquisition, the
Company achieved significant economies of scale in areas such as buying,
distribution and general and administrative costs. At the same time, the
acquisition enabled the Company to reduce its average depreciation cost per
store due, in part, to the favorable acquisition price.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at May 4, 1996 was $27,357,000 compared to $26,051,000
at February 3, 1996, an increase of $1,306,000. The Company's primary source
of working capital has historically been cash flows from operating
activities. Net cash flows provided by operating activities for the 13 weeks
ended May 4, 1996 was $2,046,000 compared to $501,000 for the 13 weeks ended
April 29, 1995. Inventory increased $8,431,000 at May 4, 1996 compared to the
fiscal year end due to the seasonal nature of the business; inventory levels
are typically at a low point at year end. The Accounts payable increase of
$13,910,000 more than offset this increase in inventory due to the terms of
the payments in relation to the receipt of the inventory.
In the first quarter of fiscal 1996, the Company invested $2,356,000 in
equipment, leasehold improvements and leasehold rights. These expenditures
related primarily to the purchase of leasehold rights for four stores that
the Company will open in the second and third quarter of this fiscal year.
The Company currently estimates that the capital expenditures for
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
the remainder of fiscal 1996 will be $10,000,000. These planned
expenditures relate primarily to store remodels and a new point-of-sale
system.
The Company has entered into lines of credit with Bank of America
National Trust and Savings Association ("Bank of America") in an aggregate
principal amount of $30,000,000 (the "Revolving Credit Facilities"), and a
five year amortizing term loan with Bank of America in the amount of
$10,000,000 (the "Term Loan"). Although the Revolving Credit Facilities
expire on July 1, 1996, the Company intends to renew such facilities on
substantially the same terms. In connection with the Contempo Casuals
acquisition, the Company entered into the Term Loan to satisfy certain net
worth requirements related to the assignment of leases. As of May 31, 1996,
there were no borrowings under the Revolving Credit Facilities, and the
Company was in compliance with all terms and covenants of such agreements.
The Company invests its excess funds primarily in a short-term investment
grade money market fund, investment grade commercial paper and U.S. Treasury
and Agency obligations. Management believes the Company's working capital and
cash flows from operating activities, together with the net proceeds from the
sale by the company of 765,000 shares of Class A Common Stock in the public
offering on May 24, 1996, will be sufficient to meet the Company's operating
and capital requirements in the foreseeable future.
SEASONALITY AND QUARTERLY OPERATING RESULTS
The Company's business is seasonal by nature with the Christmas season
(beginning the week of Thanksgiving and ending the first Saturday after
Christmas) and the back-to-school season (beginning the last week of July and
ending the first week of September) historically accounting for the largest
percentage of sales volume. In the Company's three fiscal years ended
February 3, 1996, the Christmas and back-to-school seasons accounted for an
average of approximately 32% of the Company's annual sales, after adjusting
for sales increases related to new stores. The Company does not believe that
inflation has had a material effect on the results of operations during the
past three years. However, there can be no assurance that the Company's
business will not be affected by inflation in the future.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
STATEMENT REGARDING FORWARD LOOKING DISCLOSURE
Certain sections of this Quarterly Report on Form 10-Q, including the
preceding "Management's Discussion and Analysis of Financial Condition and
Results of Operations," contain various forward looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Exchange Act, which represent the
Company's expectations or beliefs concerning future events. The Company
cautions that these statements are further qualified by important factors
that could cause actual results to differ materially from those in the
forward looking statements, including, without limitation, the sufficiency of
the Company's working capital and cash flows from operating activities, a
decline in demand for the merchandise offered by the Company, the ability of
the Company to obtain adequate merchandise supply, the ability of the Company
to gauge the fashion tastes of its customers and provide merchandise that
satisfies customer demand, the effect of economic conditions, the effect of
severe weather or natural disasters and the effect of competitive pressures
from other retailers.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
The Company is not party to any material legal proceedings, other than
ordinary routine litigation incidental to the Company's business.
ITEM 2 - CHANGES IN SECURITIES. Not Applicable
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES. Not Applicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not Applicable.
ITEM 5 - OTHER INFORMATION. Not Applicable
ITEM 6(a) - EXHIBITS. Not Applicable
ITEM 6(b) - REPORTS ON FORM 8-K. Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Wet Seal, Inc.
(Registrant)
Date: June 16, 1996 /S/KATHY BRONSTEIN
----------------------- ------------------------------
Kathy Bronstein
Vice Chairman and Chief
Executive Officer (Principal
Executive Officer)
Date: June 16, 1996 /S/EDMOND THOMAS
----------------------- ------------------------------
Edmond Thomas
President and
Chief Operating Officer
Date: June 16, 1996 /S/ANN CADIER KIM
----------------------- ------------------------------
Ann Cadier Kim
Vice President of Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE WET
SEAL, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED
STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-3-1996
<PERIOD-START> FEB-4-1996
<PERIOD-END> MAY-4-1996
<CASH> 56,370,000
<SECURITIES> 0
<RECEIVABLES> 81,000
<ALLOWANCES> 0
<INVENTORY> 24,672,000
<CURRENT-ASSETS> 87,696,000
<PP&E> 81,393,000
<DEPRECIATION> 44,159,000
<TOTAL-ASSETS> 128,969,000
<CURRENT-LIABILITIES> 60,339,000
<BONDS> 0
0
0
<COMMON> 1,250,000
<OTHER-SE> 57,234,000
<TOTAL-LIABILITY-AND-EQUITY> 128,969,000
<SALES> 80,575,000
<TOTAL-REVENUES> 80,575,000
<CGS> 61,537,000
<TOTAL-COSTS> 18,264,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (477,000)
<INCOME-PRETAX> 1,251,000
<INCOME-TAX> 529,000
<INCOME-CONTINUING> 722,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 722,000
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
