THOMAS LEAVES WET SEAL
Byline: Melanie Kletter / With contribution from Kristin Young, Los Angeles
NEW YORK — Struggling teen retailer The Wet Seal said it will take a pretax charge of 8 cents a share, or $1.65 million, in the third quarter related to the resignation of longtime president and chief operating officer Edmond Thomas.
The company, based in Foothill Ranch, Calif., said no successor has been named and gave no reason for his departure.
Thomas, whose resignation is effective Oct. 13, has been responsible for the company’s distribution systems, real estate, financial management and information systems. He joined the company in 1992, when he became chief operating officer, and helped guide the firm through an expansion spurt, including the purchase of the Contempo Casuals chain in 1995.
Irv Teitelbaum, Wet Seal’s chairman of the board, told WWD that Thomas’s contributions to the company have been “multifold.”
“I see him leave with a great deal of regret and that is echoed by [chief executive officer] Kathy Bronstein and the board of directors,” Teitelbaum said. “We have a very special relationship with Ed and we truly see him go with great sadness. Since 1992, he has been credited with building an infrastructure for Wet Seal, whether it was in areas of distribution or merchandise information systems.”
Thomas will be entitled to a profit-related bonus for the fiscal year ending Feb. 3, 2001 as if he were an employee through the end of the fiscal year. He will have 120 days from Oct. 13 to exercise vested stock options and will forfeit any nonvested options, the company said.
Kelly Armstrong, an analyst at Wheat First Union, said with the “high payout,” it is hard to discern whether the decision to leave came from Thomas or the company.
“That is an extremely high amount,” she observed. “And I would have liked for them to have named someone to replace him.”
Bronstein said Thomas was not terminated.
“I wish him all the best and I think he’ll be very successful in whatever he chooses to do in the future,” she said. “He was a great partner and I’m sorry to see him go, but the business will go on.”
Wet Seal, which operates 567 stores under the banners Wet Seal, Contempo Casuals, Limbo Lounge and Arden B., has faced difficulties on and off for the last two years. In its most recent earnings for the six months ended July 29, profits plunged 66.9 percent to $2.7 million, or 21 cents a share, from $8 million, or 63 cents. Sales rose 10.2 percent to $128.2 million from $126.9 million, but same-store sales slid 2.9 percent.
Analysts and company executives have said that Wet Seal has had difficulty finding the right fashion mix. The firm has alternated between concentrating on heavy club looks and casualwear, and has missed some key trends such as focusing on tops in the midst of a bottoms cycle. Margins have been a problem all year, as the company was stung by unexpected markdowns among other problems.
“The company has taken steps to get its merchandise in order, but it sometimes takes a while for that to click with consumers,” Armstrong said.
On a positive note, Armstrong said she is encouraged by the company’s recent management hires. In April, the firm named Greg Scott, a former merchant at Laundry by Shelli Segal, as president of its Arden B. contemporary retail division, and in August, the company hired Stephen Cox as senior vice president and general merchandise manager of Wet Seal and Contempo Casuals chains and also named Steven Strickland as vice president of creative and marketing, a new post.
Bronstein, one of the few women at the helm of a large retail chain, remains chairman and chief executive officer.