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Wet Seal Shutters Arden B Stores
Teen retailer Wet Seal Inc. is shedding its young contemporary chain of stores called Arden B, which last year accounted for only $60.4 million in revenues, or 11 percent of the company’s total revenues.
The news came on April 25, when Wet Seal, based in Foothill Ranch, Calif., announced that 31 Arden B locations would transition to the new Wet Seal + concept with merchandise for large-size juniors and the remaining 23 locations would carry Wet Seal merchandise.
This conversion of merchandise is expected to be completed by the beginning of the Back-to-School season.
The company, through lease expirations and by exercising early-termination provisions, will close 15 Arden B locations through the remainder of fiscal 2014 and 16 Arden B locations in fiscal 2015.
Wet Seal intends to negotiate with landlords and find other alternatives to speed up the transition and exit of the remaining 23 Arden B locations where leases do not expire prior to the company’s fiscal 2015 year-end.
Effective immediately, the Wet Seal merchandising organization assumes responsibility for Arden B stores, and scores of Arden B employees will be affected by the shuttering of the chain.
The release of some team members and reduction in other expenses will have a pre-tax savings of approximately $1.3 million beginning in the second quarter of fiscal 2014.
Wet Seal expects to incur approximately $0.1 million of charges for severance costs in the first quarter of fiscal 2014 and approximately $0.3 million of charges for store employee–retention programs in the second and third quarters of fiscal 2014.
The company also anticipates non-cash asset impairment charges of up to approximately $3 million in the first quarter of fiscal 2014 pertaining to Arden B store assets. In addition, the exercise of early lease–termination provisions in fiscal years 2014 and 2015 is expected to result in approximately $0.5 million of payments related to unamortized tenant allowances.
In a financial guidance report for the first quarter of fiscal 2014, Wet Seal executives said that same-store sales are expected to be in the negative mid to high teens for the bricks-and-mortar outposts and the e-commerce site.
