NEW YORK — The Wet Seal Inc. on Tuesday said it will close 150 stores, shedding 2,000 jobs in the process.
The Foothill Ranch, Calif.-based retailer said it was shuttering the underperforming Wet Seal stores as “part of a major restructuring plan.” A liquidator has been appointed to manage the inventory for the stores being closed, a process that is expected to be completed by the end of February.
“While a difficult decision to make, it is necessary for The Wet Seal Inc. to reduce its cost structure and focus on those stores that can deliver the best performance as we implement our new merchandise strategy,” said Joe Deckop, interim chief executive officer. “We thank all of our employees for their continued commitment during these challenging times.”
The retailer said the costs associated with the store closings and severance for employees will be recognized in the fourth quarter ending Jan. 29. It is currently completing its estimate of the related costs and expects to disclose the amount next month.
Wet Seal operates 559 stores in 47 states, including 96 Arden B. stores, which are not affected by the closures under the Wet Seal nameplate.
Wet Seal has seen better days. The troubled retailer earlier this month hired Joel Waller, chairman of Wilsons Leather, as its new ceo, effective Feb. 1. With 27 years of retail experience, Waller will be taking the helm from Peter Whitford, who resigned on Nov. 9. Interim ceo Deckop will return to his role as executive vice president when Waller joins the company.
Wet Seal posted third-quarter results on Dec. 1 that showed declining sales, a wider loss and eroding gross margins. The loss for the three months ended Oct. 30 swelled to $24.6 million, or 68 cents a diluted share, from a loss of $7.5 million, or 25 cents, in the same year-ago quarter. Sales fell by 15.9 percent to $110.8 million from $131.8 million, while same-store sales declined by 12.6 percent.
In a prerecorded call to Wall Street detailing results, the company said that year-over-year average units sold dropped 7 percent while transactions fell 20.1 percent. The average units purchased showed a gain of 26.7 percent, year-over-year. Due to softer same-store sales and lower sales volume, the retailer’s gross margin as a percent of sales suffered a steep decline, falling to 16.2 percent in the quarter from 21.9 percent in the prior year.The retailer is still in the process of seeking “strategic alternatives” for its business.
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