Wet Seal to Close 150 Stores
The Wet Seal Inc, announced Tuesday that it will close 150 stores, more than one-quarter of the company’s 559 shops. The Foothill Ranch, Calif.–based teen retailer, which has suffered more than nine quarters of negative comparable-store sales, is making the move to regain financial health.
Christy Glass Lowe, a retail analyst from the Los Angeles offices of USBX Advisory Services, said the closures may be the first in a series of heavy restructuring efforts. On Dec. 16, Wet Seal hired Joel N. Waller as chief executive officer. Waller developed a reputation for being a turn-around artist when he was the chief of Wilsons The Leather Experts Inc. In 2004, he closed 25.4 percent of the Brooklyn Park, Minn.–based leather outerwear retailer’s stores to lead the company toward financial prosperity.
His efforts met with success. A report released by Wilsons on Dec. 9 stated that comparable-store sales increased 7.2 percent in the quarter ended Oct. 30, compared with a 9 percent decrease one year before.
Glass Lowe said Wet Seal is closing its stores because of an immediate need and may have more changes in store. “I won’t be surprised if [the company] brings in a new team and a new merchandising strategy,” she said.
Wet Seal did not release information about which stores will close. But the company has already hired a liquidator and may shut down stores by the end of January, according to a company statement. The retailer also announced that 2,000 employees will lose their jobs.
Wall Street reacted favorably to the news of the store closures. Wet Seal’s shares rose 15 percent to $2.40 during after-hours trading following the announcement. But it could take more than a few seasons for the company to return to its former glory; comparable-store sales declined 15.5 percent in October and 19.5 percent in November.
Glass Lowe said the teen retail market, currently dominated by Abercrombie & Fitch, has enough space for a reinvigorated Wet Seal.
“Teens like choice and will always be fickle,” she said. “Nobody is invincible in the teen market.”
—Andrew Asch
