Wet Seal may file for bankruptcy

[dmx10101]

Wet Seal may file for bankruptcy

December 11, 2014 | By Gina Acosta

Wet Seal may file for bankruptcy protection if it fails to immediately resolve its liquidity issues, the company said.

That warning came with the company’s third-quarter earnings report, which showed that total sales dropped more than 9% to $104 million and same-store sales fell by nearly 15%.  The teen retailer announced last month it hired outside advisers, including investment bank Houlihan Lokey, “to assist it in analyzing potential strategic and financial alternatives.” The advisory team also includes William Langsdorf, who most recently was the chief financial officer and senior vice president of Tilly’s, another teen-focused retailer.

Wet Seal, which previously reported it has engaged outside advisers to seek strategic alternatives, indicated it may consider filing for bankruptcy to recapitalize or restructure its debt and obligations. In addition, the company plans to close 60 stores in the fourth quarter of fiscal 2014 as the lease term expires.  Other steps Wet Seal is taking to address financial issues include repositioning the merchandise assortment with a greater emphasis on fashion product, refocusing its marketing program on target customers, and driving growth in its e-commerce business. Net sales dropped 9% to $104.3 million from $114.9 million. Same-store sales plunged 14.5%.

“While our results came in at the low end of our expectations during the third quarter, we continue to take important steps in our efforts to address our financial position and our ongoing challenges,” said CEO Ed Thomas. Thomas said solving Wet Seal's cash crunch is crucial "in the very near term" so it can launch new initiatives to "recapture our target customer."

As of November 1, the company operated 528 stores.

[shore72]

Not a store I'd ever paid attention to, but this weekend we were in the Centre at Salisbury (MD) and noticed while walking by Wet Seal that the shelves were almost empty, 70% signs posted. I was talking to the manager of an adjacent store who told me the employees were given 24 hours notice of the closing. I spotted one of them in front of the store, talking to family, almost in tears. As always, sad to see.

[Ameskid]

Employees are NOT happy.

Huntsville, AL


Dayton, OH


Seattle, WA

[dmx10101]

Wet Seal gets $27 million default notice

January 5, 2015

Embattled teen retailer Wet Seal Inc. has defaulted on $27 million in senior convertible notes and related costs.

In a regulatory filing, Wet Seal said the total amount due is equal to $28.8 million, plus costs of collection, attorneys’ fees and disbursements.

On Dec. 29, the company and its creditor -- Hudson Bay Master Fund Ltd. -- entered a forbearance agreement that lasts until Jan. 12, according to the filing, giving the retailer a two-week reprieve.

Wet Seal, a Foothill Ranch, Calif.-based chain focused on young women, has lost more than $150 million over the past two years and is projected to lose an additional $88 million in the current fiscal year. Competition from e-commerce sites and fast-fashion retailers, as well as a broader slowdown in mall traffic, have sent its sales tumbling.

The company also said in the filing that it had increased the base salary of Chief Financial Officer Thomas Hillebrandt to $350,000 from $255,000.

The retailer recently posted a loss of $35.9 million in the quarter ended Nov.1, up from a loss of $12.5 million the previous fiscal year.

Wet Seal, which previously reported it has engaged outside advisors to seek strategic alternatives, indicated it may consider filing for bankruptcy to recapitalize or restructure its debt and obligations.

In addition, the company plans to close 60 stores in the fourth quarter of fiscal 2014 as the lease term expires.

Wet Seal has hired outside advisors, including Houlihan Lokey and FTI Consulting, to assist it in analyzing potential alternatives.

[dmx10101]

Wet Seal closing 338 stores, laying off nearly 3,700 employees
January 7, 2015 | By Marianne Wilson

Foothill Ranch, Calif. -- The Wet Seal announced it would close 338 stores, or about 66% of its total portfolio, “on or about” Jan. 7, resulting in the termination of some 3,695 full- and part-time employees. The struggling teen apparel retailer said the decision to close the stores was based on its overall financial condition and an inability to negotiate meaningful concessions from its landlords.   

The company said the 338 stores represented approximately 48% of its sales for the nine months ending on November 1, 2014. Following the closures, Wet Seal will be left with approximately 173 stores and its Internet business

Similar to many other teen apparel retailers, Wet Seal has been hurt by a combination of slowing mall traffic and increased competition from such fast-fashion players as Forever 21 and H&M, and online upstarts. The company lost more than $150 million during the past two years.

In December, the retailer warned that it could file for bankruptcy protection if it was unsuccessful in addressing short-term liquidity needs. The retailer had previously engaged Houlihan Lokey and FTI Consulting to help it explore financing alternatives.

“This was a very difficult decision to make, but after reviewing many other options since I returned to the company in September, our financial condition leaves us no other alternative than to close these stores,” said Wet Seal CEO Ed Thomas. “This is an extremely difficult time for the entire Wet Seal team, and we are doing everything we can to protect the interests of all of our stakeholders, including our employees.”

The retailer expects to incur estimated pre-tax charges ranging from an aggregate of $5.4 million to $6.4 million related the closings, including costs associated with inventory write-off, asset impairments and employee terminations. The estimates do not include any claims or demands which may be made by the landlords of the impacted stores for unpaid rent or otherwise.

[ynkeesfn82]

And they did file for bankruptcy.

http://www.latimes.com/business/la-fi-wet-seal-bankruptcy-20150116-story.html