The Wet Seal, Inc. Announces July Comparable Store Sales Declined 12.1% and Affirms Second Quarter EPS Guidance within Lower End of Range

The Wet Seal, Inc. (Nasdaq: WTSLA), a leading specialty retailer to young women, reported net sales and comparable store sales for the four-week period ended August 1, 2009, or fiscal July, and the fiscal second quarter ended August 1, 2009, as follows:

(1) Net sales in the current year fiscal July and fiscal second quarter included breakage benefits of $1.2 million ($0.8 million at Wet Seal and $0.4 million at Arden B) resulting from a change in estimated breakage for unredeemed gift cards, gift certificates and store credits remaining outstanding more than two years from their respective issuance dates. Before the effects of breakage adjustments on both fiscal years, fiscal July sales declined 9.1% at Wet Seal, 17.8% at Arden B and 10.6% in total, and fiscal second quarter sales declined 9.0% at Wet Seal, 10.6% at Arden B and 9.3% in total. The breakage benefits have no effect on the calculation of comparable store sales.

The Company estimates that the shift in retail "sales tax holidays” in 10 states, from fiscal July last year to fiscal August this year, negatively affected the Wet Seal division comparable store sales decline by slightly more than 1% in July.

The Company now estimates fiscal second quarter earnings per diluted share will be between $0.02 and $0.03. This includes $1.6 million in non-cash asset impairment charges, partially offset by the $1.2 million of breakage benefits, which were not anticipated in the Company’s initial guidance. These expected results are within the lower end of the Company’s initial guidance.

The Company also estimates it had year-over-year declines in inventory per square foot at Wet Seal and Arden B of approximately 15% and 21%, respectively, as of the end of the second quarter.

Ed Thomas, chief executive officer of The Wet Seal, Inc., commented: "While we are pleased with the progress we are making on the merchandising front at both divisions, the effects of the challenging economic environment continued to hamper sales. This, combined with the highly aggressive promotional environment throughout the second quarter, led to our current earnings expectations. That said, we were pleased to have achieved cost savings greater than we initially anticipated, and inventory levels remain well-aligned with the challenging environment.”

Mr. Thomas continued, "At Wet Seal, we made significant progress addressing inventory mix issues we had at the start of the second quarter. We began to see improved results in our tops business in late July due to these efforts. While we know we still have work to do in certain categories, we believe we are beginning the third quarter with an improved assortment.

"At Arden B, we are managing inventories conservatively as we continue to evaluate ideal levels under our new, lower-price selling model. This likely challenged comparable store sales results, but has also helped us maintain the merchandise margin improvements we began to demonstrate in the first quarter and improve operating income at this division in the second quarter as compared to the same period in the prior year.”

About Wet Seal

Headquartered in Foothill Ranch, California, The Wet Seal, Inc. is a leading specialty retailer of fashionable and contemporary apparel and accessory items. As of August 1, 2009, the Company operated a total of 496 stores in 47 states, the District of Columbia and Puerto Rico, including 415 Wet Seal stores and 81 Arden B stores. The Company’s products can also be purchased online at www.wetseal.com or www.ardenb.com. For more company information, visit www.wetsealinc.com.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This news release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements that relate to earnings per share and inventory per square foot expectations for the second quarter of fiscal 2009 and the quality of the Company’s inventory mix and positions entering the third quarter of fiscal 2009, as well as the intent, belief, plans or expectations of the Company or its management. All forward-looking statements made by the Company involve material risks and uncertainties and are subject to change based on factors beyond the Company’s control. Accordingly, the Company’s future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the Company’s filings with the Securities and Exchange Commission. This news release contains results reflecting partial year data and non-fiscal data that may not be indicative of results for similar future periods or for the full year. The Company will not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.