California Apparel News

Liquidation companies seemed ready to pounce on Wet Seal Inc. throughout much of 2004. The retailer had long been lagging in the highly competitive teen market. For two years, the Foothill Ranch, Calif.–based retailer had been reporting double-digit decreases in comparable-store sales.

On Dec. 16 of last year, Joel N. Waller stepped in as chief executive. Waller had been chairman of Wilson’s The Leather Experts, a company he restructured in 2004. But, after spending years selling leather jackets to men and women, skeptics wondered if he could understand the fashion desires of teenage girls.

By Dec. 28, Wet Seal announced the first steps of restructuring. They would close 150 stores and eliminate 2,000 jobs. By the time the dust settled, the chain had closed 200 stores; it now maintains 400.

Waller also set a goal of better merchandising in early 2005, and by March 2005, the company had bucked its longtime streak of declining same-store sales and has been reporting comparable sales in the high double digits. Liz Pierce of financial services company Sanders Morris Harris was impressed with Wet Seal’s performance.

“Based on the consistency of the comp sales increases, it appears that the Wet Seal brand is back on track and is starting to take back market share,” she said.

It was another story for Hot Topic Inc., which hit a rough patch in 2005. In the previous year, mall owners related in a survey by the International Conference of Shopping Centers that the City of Industry, Calif.–based teen retailer was one of the most desired tenants. Since then, the company, which runs 648 Hot Topic stores and 114 Torrid stores, has hit a rut.

Many analysts blamed a shift in trends to romantic, feminine fashions, not Hot Topic’s darkhued gothic clothes.

The slump showed few signs of breaking, and Hot Topic announced a management reshuffle. After three years of overseeing buying, on Nov. 2, Jerry Cook was named president of Hot Topic with responsibility for information technologies, distribution, legal, loss prevention and real estate. Betsy McLaughlin, the company’s chief executive, added merchandising matters to her duties.

On Aug. 17, Maria Comfort joined the company as the chief merchandising officer of the Hot Topic division. The former merchandiser, Cindy Levitt, was appointed to the new role of vice president of licensing, overseeing the 50 percent of Hot Topic merchandise that is licensed.

Pierce praised the changes. “Their business is a lot more complex than it was when they were running 200 stores,” Pierce said. “There’s going to be times when they won’t be trending in fashion. Then, licensing is going to be very important. It’s going to smooth out sales.” —Andrew Asch