The Wet Seal Inc. is in discussions to raise “new additional capital” to address its immediate liquidity needs, and said that a bankruptcy filing might occur if talks are unsuccessful.
The retailer revealed the talks in a Form 10-Q filing with the Securities and Exchange Commission for its third-quarter earnings report.
The filing said that the company might need to “seek a restructuring or other relief” in bankruptcy court if the talks are unsuccessful in the “very near term” to address its liquidity needs or experiences with other delays or difficulties in those efforts.
The company said the discussions are with third parties, as well as key financial stakeholders, lenders and landlords, among others.
Wet Seal said last month that it was working with Houlihan Lokey and FTI Consulting to assist it in analyzing potential financial alternatives, such as out-of-court restructuring.
For the third-quarter, the company more than doubled its loss for the period ended Nov. 1. The loss was $35.9 million, or 43 cents a diluted share, compared with a loss of $14.9 million, or 18 cents, a year ago. Net sales fell 9.2 percent to $104.3 million from $114.9 million, while comparable-store sales decreased 14.5 percent.
Ed Thomas, chief executive officer, said, “A key priority is to address our immediate liquidity needs in the very near term in order for us to have the time and resources to be able to implement our operating strategies.”
He added that operating priorities include repositioning the merchandise assortment with a greater emphasis on fashion product, as well as developing a marketing program “with stronger aspirational messaging designed to recapture our target customer.”