By  on July 26, 2005

LOS ANGELES — Teen apparel retailer Wet Seal Inc. said on Monday that it will take a $2 million cash charge and a $13.3 million noncash charge in the second quarter related to a consulting agreement with turnaround specialist Michael Gold.

The Foothill Ranch, Calif.-based company rebounded after Gold came aboard in November and new chief executive officer Joel Waller — the second ceo in less than two years — took the helm in February. Until March, the company had been in a decline that started in 2002, when same-store sales slipped 5.6 percent compared with an increase of 4.7 percent the previous year.

Wet Seal, which has said it is modeling its business after hot Los Angeles-based teen retailer Forever 21, announced earlier this month it will pay Gold $4 million over two years. Gold is a well-known Canadian retailer and owner of Stitches, a Toronto-based, privately owned low-priced juniors' clothing chain with more than 400 locations in Canada and the U.S.

The company said the $2 million charge reflects Gold's compensation through July 30.

In addition to 2 million restricted shares that will vest on Jan. 28, Gold also will receive two tranches of performance shares of 1.75 million each. Charges for those will be recorded over the 30-month period ending Jan 1, 2008, on a variable basis. And the amount and timing of the charges will depend on the stock's fluctuations.

The company this month reported that same-store sales for the five-week period ended July 2 increased 59.3 percent compared with a decline of 10.1 percent for the same period a year ago. Net sales for the second quarter ending July 2 were $193 million compared with net sales of $172.8 million for the same period last year — an 11.7 percent increase.

Wet Seal operates 397 stores, including 306 Wet Seal stores and 91 Arden B. stores.

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