California Apparel News

The Wet Seal Inc. debuted the Ashlee Simpson Designs for Wet Seal celebrity tops and T-shirts line on April 22, as leadership for the Foothill Ranch, Calif.–based juniors chain has undertaken new measures to revive its flagging fortunes.

“It’s a good way to drive traffic to the store,” retail analyst Liz Pierce said. “But with more than 10 SKUs, you don’t expect [Simpson’s line] to be a big money maker. They hope it is profitable. But they also hope it will be a good traffic driver.” Pierce works for Newport Beach, Calif.–based financial-services company Roth Capital Partners.The Ashlee Simpson T-shirts and tops line debuted the same day that the 23-year-old Simpson’s album “Bittersweet World” was released by Geffen Records. The album will be sold in Wet Seal, along with her T-shirts bearing her likeness, which retail for $15.50, and the Simpson line’s one-shoulder top, which retails for $19.50.

The celebrity debut comes at a time of sales trouble for the juniors retailer, which owns 399 Wet Seal stores and 95 stores for its contemporary division, Arden B. Wet Seal suffered through three consecutive quarters of sales declines since the first quarter of 2007. Its comparable-store sales for March 2008 declined 10.8 percent.

Despite the gloomy sales picture, financial analysts have applauded the efforts of Wet Seal Chief Executive Ed Thomas, who has been Wet Seal’s leader since October 2007.

“I give him high marks,” Pierce said. “He had an action plan. He let people know that he is serious.”

Since joining the company, Thomas has commenced a campaign of cost-cutting and developing new ways to merchandise the juniors brand. In January, more than 49 jobs were cut at the company. On Feb. 5, Arden B. Merchandising President Greg Gemette resigned from the long-suffering division. Sharon Hughes, a former senior vice president of Arden B. merchandising was hired as the interim president of merchandising.

Pierce said Thomas enjoyed a head start in diagnosing the retailer’s problems. He had previously served as Wet Seal’s president and chief operations officer from 1992 to 2002. He later served as chief executive for juniors retailer Tilly’s. When he returned to Wet Seal, he had already identified measures the retailer could take to revive its fortunes, according to Pierce.

Recently, Thomas outlined revival measures at various investors’ meetings such as the B. Riley Ninth Annual Investor Conference in April 2 in Las Vegas and in financial documents Wet Seal released on April 10.

The outlined measures range from changing merchandise strategies, such as offering more bottoms and jeans in its Wet Seal stores, to relying less on print advertising for marketing and more on direct mail to developing more-efficient transportation for shipping its product.

Thomas also changed the company’s real estate strategy. In 2006 the retailer was preparing an expansion with the eventual goal of increasing its store fleet to more than 600 Wet Seal locations and more than 200 Arden B. stores. In 2008, the retailer curtailed growth. No Arden B. openings are planned for this year.More than 20 Wet Seal locations are scheduled to open in 2008.

Wet Seal will experiment with opening stores at power centers anchored by big-box stores. The first power center Wet Seal is scheduled to open in is in Fresno, Calif., before the 2008 Back-to-School season.

Retail analyst Jeffrey Van Sinderen of Los Angeles–based B. Riley & Co. said leases from the power-center experiment could provide relief from increasing mall rents.—Andrew Asch