Jan 7, 2015
Wet Seal lays off 3,700 as it closes 338 stores
Jan 7, 2015
Struggling apparel retailer Wet Seal Inc said it laid off about 3,700 full- and part-time employees on Wednesday as it went ahead with the closure of 338 stores.
The closures follow the failure to re-negotiate meaningful concessions from landlords, the company said.
The closed stores accounted for almost half of Wet Seal's net sales of about $317 million in the nine months to Nov. 1.
The company said it now expected to operate 173 stores.
The retailer, which caters largely to teenagers, said last month that it was exploring strategic and financial alternatives and could file for bankruptcy protection if it failed to meet immediate liquidity needs.
Wet Seal has reported falling year-on-year sales growth for the past five quarters.
The closures will result in pre-tax charges of $5.4 million-$6.4 million, Wet Seal said.
Many teen apparel retailers have been losing market share to fast-fashion brands such as H&M, Forever 21 and Inditex's Zara, which bring the latest styles from the runway to their stores within weeks.
Delia*s Inc and private-equity owned Deb Shops filed for Chapter 11 bankruptcy protection last month.
Online retailers such as Amazon.com Inc have also been eating into the market share of apparel retailers, by offering deeper discounts.
A year ago, Wet Seal had a total of 7,413 full- and part-time employees.
California-based Wet Seal's stock rose nearly 11 percent to 6 cents in early trading, having lost about 97.6 percent of its value in 2014.
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