Specialty retailer The Wet Seal, Inc. (Nasdaq:WTSLA) today reported a net loss from continuing operations of $24.6 million, or $0.68 per share for the thirteen-week period ended October 30, 2004. This compares to a net loss from continuing operations of $6.4 million, or $0.21 per share for the same period last year.

Sales from continuing operations for the thirteen weeks to October 30, 2004 totaled $110.8 million, compared to net sales of $131.8 million for the same period last year. Comparable store sales for the thirteen-week period ended October 30, 2004 declined 12.6 percent, compared to a decline of 10.1 percent for the same period last year. The company closed four Wet Seal stores during the third quarter. The total number of stores for continuing operations at quarter's end was 558 versus 590 a year ago.

The company reported gross margin as a percentage of sales from continuing operations of 16.2 percent for the third quarter compared to 21.9 percent in the prior year. The deterioration in gross margin was primarily due to the lower sales volume from fewer stores in operation and the negative comparable store sales.

Selling, general and administrative expenses ("SG&A") were $42.5 million for the thirteen-week period ended October 30, 2004, compared to $39.0 million for the same period last year. The increase in SG&A was primarily due to costs associated with the company's evaluation of strategic alternatives and compliance costs associated with Sarbanes-Oxley.

At October 30, 2004, the company had cash and cash equivalents totaling $22.8 million and no outstanding borrowings under its senior secured credit facility. There were $31.0 million in outstanding letters of credit, primarily associated with merchandise purchases at quarter's end. At October 30, 2004, there was $14.9 million available for cash advances and letters of credit under the terms of the senior secured credit facility and the company was in full compliance with its financial covenants. During the third quarter, the company completed an $8 million junior secured term loan.

At October 30, 2004, inventory at cost totaled $41.2 million compared to $51.6 million at November 1, 2003, a decline of 20.2 percent. The decline in inventory was deeper than expected and primarily due to the timing of merchandise receipts at the Wet Seal division.

On November 9, 2004, the company announced an agreement with a group of investors led by S.A.C. Capital Associates LLC to provide up to $55.8 million in new financing for The Wet Seal, Inc. Under the terms of the agreement, the company is required to obtain shareholder approval for the transaction, pursuant to a proxy solicitation, which is expected to take place in January 2005.

The company and these investors also entered into an agreement whereby a secured term loan of $10 million was made to the company as a bridge financing facility. This loan will be repaid at the earlier of the completion of the transaction or February 28, 2005.

The company is currently working with Michael Gold, a highly experienced retail executive who owns more than 400 retail clothing stores in Canada and the U.S., as a consultant to guide merchandising initiatives, primarily in the Wet Seal division. In addition, the company is working with a real estate consultant to evaluate and provide assistance with store closures and related lease terminations, and a management consultant to provide an on-site analysis of all non-merchandising departments.

In light of these recent activities, and anticipated changes to its operations, The Wet Seal, Inc. will not be providing financial guidance for the fourth quarter of fiscal 2004 at the current time.

Further details on the company's financial results for the thirteen weeks ended October 30, 2004 are available on a pre-recorded message which can be accessed by dialing (888) 203-1112 or (719) 457-0820 and provide the ID number 861 759. This message will be available through December 8, 2004 and is also available on the company's website at www.wetsealinc.com.

Headquartered in Foothill Ranch, California, The Wet Seal, Inc. is a leading specialty retailer of fashionable and contemporary apparel and accessory items. The Company currently operates a total of 559 stores in 47 states, the District of Columbia and Puerto Rico, including 463 Wet Seal stores and 96 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 the Company's opening and closing of stores, profitability and growth, demand for its products or any other statements that relate to 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.