Wet Seal Announces 35 Job Cuts, COO Resignation
The Wet Seal Inc. announced a $25 million share-repurchase program, the resignation of Chief Operating Officer Ken Seipel and the elimination of 35 positions within the Foothill Ranch, Calif.–based vertical retailer.
The cuts include 32 positions at Wet Seal’s corporate offices as well as three field positions. The company also did not renew leases for two stores in its contemporary Arden B division.
The cost-cutting measures were among the first major initiatives under new Chief Executive Officer John Goodman, who assumed the top spot last month.
The staff reductions will save the beleaguered retailer more than $5.5 million, Goodman said. “We now have a leaner and more nimble and entrepreneurial organization,” he said. “Our team is now better structured to take quick and decisive actions to improve merchandising and increase efficiencies throughout functional areas.”
The changes were received well by retail analyst Jeff Van Sinderen of Los Angeles–based B.Riley & Co. “It is great that they are reducing expenses,” Van Sinderen said. “We’re happy to see the share repurchase. But we think there will have to be hiring in certain areas to turn around the product and improve product merchandising.”
Wet Seal is emerging from a tumultuous period during which the company’s former chief executive, Susan McGalla, was fired and a proxy battle was waged to bring in a new board, which joined the company in October. The board appointed Goodman in January to run the company. Seipel was hired by McGalla in March 2011. His contract had been scheduled to run until March 2014. Seipel will get a $1.3 million severance fee.
Wet Seal also announced that it will create new human-resources positions in collaboration with the U.S. Equal Employment Opportunity Commission. The new human-resources positions will craft diversity initiations and performance reviews. In December, the EEOC concluded an investigation brought on by an African American former employee’s racial-discrimination complaint. Wet Seal stated it has a zero-tolerance policy on discrimination. —Andrew Asch
