Credit Suisse downgraded shares of Wet Seal (WTSLA) today from Outperform to Neutral with a price target of $5.
The basic idea behind their downgrade was that the seemingly easy same store sales comparisons for 2009 were misleading (WTSLA's 2008 is estimated at -3.5%, making for an easier '09 comp). They believe that the better measure is sales productivity (sales/sq. ft), and for many retailers, comparisons on that basis would be much more challenging.
From their report:
"Specifically, we estimate Wet Seal will achieve sales/sq. ft. of $324 in 2008. While this doesn’t seem high compared to higher price point retailers, for Wet Seal $324/sq. ft. is 26% higher than the average productivity the company achieved over the last five years ($257)."
This puts WTSLA at the top of their list of retailers comparing 2008 estimates on sales productivity to a five-year average (2003-2007 sales productivity average).
Additionally, they also mention that they are not all that bullish on the turnaround of the Arden B division.