Gordon Brothers Wins Bid for The Wet Seal
The Wet Seal, the Southern California teen retail chain that filed for bankruptcy protection in early February, will be bought by the Gordon Brothers Group, which won a U.S. bankruptcy auction by bidding $3 million for the company’s brand name.
The acquisition also includes other brands within the Wet Seal portfolio including Arden B, Blink, Chic Boutique and several others.
Gordon Brothers beat out Canadian retailer YM, which was the stalking-horse bidder with a $1.5 million proposal.
YM—which owns juniors retail chains that operate under the nameplates of Stitches, Sirens and Suzy Shier—submitted its bid by the Feb. 28 deadline stipulated by the U.S. Bankruptcy Court in Delaware. But Gordon Brothers came back with a higher price, which must be approved by a bankruptcy judge.
Gordon Brothers is known for liquidating store merchandise when retailers fall on hard times but also has a brand-investing division. In the past, the Boston-based company has acquired failing retailers such as the Sharper Image and Polaroid.
“Despite the increasing challenges facing teen retailers, we at Gordon Brothers strongly believe in the long-term viability of the category,” said Ramez Toubassy, president, brands, in a statement. “Our plan for Wet Seal is to rebuild and reposition the brand and develop a unique new business model to best position it for future success.”
When The Wet Seal filed for bankruptcy, Hilco Streambank was 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’s online site is temporarily shut down with this message on its home page: “Thanks, Babe, It’s Been Real.”
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 and $20 million debtor-in-possession financing.
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.
After emerging from its last bankruptcy in 2015, The Wet Seal downsized its footprint to 170 outposts. Two weeks before announcing its bankruptcy this February, The Wet Seal notified the state’s Employment Development Department that it was laying off 148 employees, effective March 20.