How Will Wet Seal (WTSL) Stock Be Affected By The Hiring Of Its New CEO?
NEW YORK ( TheStreet) -- Wet Seal
Goodman stepped down from his position with the retailer on August 27, after less than two years on the job, according to a SEC regulatory filing by the company.
The retailer replaced Goodman with its former president and CEO, Edmond S. Thomas, who will be paid a base salary of $975,00 with a $75,000 signing bonus, according to the Orange County Business Journal .
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Thomas previously held the CEO position from October 2007 to January 2011.
TheStreet Ratings team rates WET SEAL INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate WET SEAL INC (WTSL) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 800.4% when compared to the same quarter one year ago, falling from $3.11 million to -$21.78 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, WET SEAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for WET SEAL INC is rather low; currently it is at 22.33%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -18.65% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$14.50 million or 258.78% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 73.46%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 966.66% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: WTSL Ratings Report
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