Wet Seal Shutters 338 Stores, Fires More than 3,000
Beleaguered retailer The Wet Seal Inc. announced on Jan. 7 that it will close two-thirds of its fleet of more than 500 stores after being unable to negotiate favorable terms with its landlords. It also cut the jobs of thousands of its workers.
Ed Thomas, chief executive officer of Wet Seal, stated the juniors retailer would close 338 retail stores effective immediately. The Foothill Ranch, Calif.–headquartered Wet Seal will continue to do business with its remaining 173 physical stores and e-commerce store (www.wetseal.com).
Thomas also announced that 3,695 of its full- and part-time employees will lose their jobs.
“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. 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. We acknowledge and sympathize with how hard these recent events have been on our employees, both those staying with the company and especially those who are leaving the company this week,” Thomas said in a statement.
Former employees posted on the windows of shuttered Wet Seal locations placards protesting the mass job loss, according to media reports. Social-media sites such as Twitter and Reddit had expressions of outrage. A Twitter user named Debbie Dong wrote “@wetsealShame on you for your treatment of your employees. You owe them respect and honesty, failed.” She signed off with the hashtags #forgetwetseal and #boycottwetseal.
The past few years have been turbulent for Wet Seal, with proxy battles, declining sales and three different CEOs helming the company in the past few years. In a Dec. 10 statement, the company revealed that its future might be in flux and that bankruptcy was a possible scenario.
On Dec. 29, Wet Seal hoped to stave off bankruptcy when it entered into a forbearance agreement with the Hudson Bay Master Fund Ltd. when Hudson Bay demanded to collect $27 million, on which Wet Seal was in danger of defaulting.
The lightning-quick store closings will be expensive for the retailer. Wet Seal expects to incur estimated pre-tax charges ranging from $5.4 million to $6.4 million connected with inventory write-off, asset impairments and employee terminations.