LOS ANGELES — The seas might get choppier before the calm for ailing teen retailer Wet Seal, which Tuesday announced the resignation of chairman and chief executive Peter Whitford. At the same time, the company confirmed it has solidified an...
LOS ANGELES — The seas might get choppier before the calm for ailing teen retailer Wet Seal, which Tuesday announced the resignation of chairman and chief executive Peter Whitford. At the same time, the company confirmed it has solidified an agreement with New York-based S.A.C. Capital Management to generate some much-needed cash.
While the Foothill Ranch, Calif.-based chain searches for a new ceo, it has named executive vice president Joseph Deckop as interim ceo. Deckop has held roles in finance and operations at the Disney Stores, Victoria’s Secret and The Limited Stores.
“Peter felt it was in the best interest of Wet Seal and the shareholders to step aside and allow the process to take its due course,” said Deckop. “But we are working with the investors and consultants to put more meat on the bones of the strategic plan and get the ball rolling.”
To that end, the company has also hired retail executive Michael Gold, who has run more than 400 clothing stores in the U.S. and Canada, as a consultant. Deckop did not name possible successors to Whitford or a timetable for replacing him, but did offer that “ideally, it would be sooner rather than later.”
Under the new financial agreement, S.A.C. — which already owns a 4.5 percent stake in the company — would issue $40 million to the company in exchange for convertible notes. Wet Seal, which in August posted a loss of $102.8 million for the second quarter, would receive an injection of $10 million in interim financing immediately.
Wet Seal said it would also issue investment rights warrants that would let it raise another $15.85 million in notes convertible into common stock.
But some analysts say that the company still has a long road ahead, and a quick-fix cash infusion alone is not a guarantee of future success.
“Certainly it buys them time, but the challenges are still significant,” said Liz Pierce, an analyst at Sanders, Morris & Harris. “Traffic continues to decline, and what that says is how competitive this segment of the market is.”
While Deckop would not detail any specific plans the company might employ to turn around business, he said that “speed to market and responding to our fashion customer”are the biggest hurdles for the company.Said Deckop, “I think we can move fast, faster than we have in the past.”