As of Thursday, February 16, 2017
Another California clothing venture is selling its brand after declaring Chapter 11 bankruptcy protection.
After filing for bankruptcy protection on Feb. 2, The Wet Seal started closing all its stores. Now it is auctioning off its intellectual-property assets with bids expected by 5 p.m., Eastern Time, on Feb. 28 to the U.S. Bankruptcy Court in Delaware.
The Wet Seal follows in the footsteps of Los Angeles–based Nasty Gal and American Apparel, which recently sold their brands to foreign companies that will keep the labels alive but resulted in thousands of people losing their jobs and scores of stores being shut down.
Hilco Streambank has been retained to market and sell The Wet Seal’s intellectual-property assets. Included in the sale are trademarks, domain names, customer databases and the e-commerce platform.
The Wet Seal, headquartered in Irvine, Calif., has been slowly drowning in debt over the years. The teen retailer emerged from bankruptcy two years ago after being sold to an affiliate of Versa Capital Management for $7.5 million.
At its height, the shopping mall–based retail chain, which sold young contemporary clothing, operated more than 500 stores in 48 states.
The company also operated 54 stores under the Arden B nameplate, but that chain was closed in 2014 with 31 of the locations being converted into plus-size fashions under The Wet Seal label. In fiscal 2013, Arden B had $60.4 million in sales, which represented 11 percent of the company’s revenues in fiscal 2013.
After emerging from its last bankruptcy in 2015, The Wet Seal downsized its footprint to 170 outposts. Two weeks before announcing its bankruptcy, The Wet Seal notified the state’s Employment Development Department that it was laying off 148 employees, effective March 20.
The Wet Seal was incorporated in 1990 and founded by Lorne Huycke. Five years later, the company acquired 237 Contempo Casual stores from the Neiman Marcus Group.
Over the years, the retail chain has faced increasing competition from fast-fashion stores and e-commerce sites selling clothing.