Foothill Ranch, CA—Faced with stinging competition from fast-fashion retailers and slowing sales, Wet Seal today announced it will be closing 338 stores—approximately two-thirds of its retail locations, a move that could affect nearly 4,000 employees.
“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,” said CEO Edmond Thomas in a statement
2014: Another Year of Losses
Wet Seal, along with teen retailers such as Abercrombie & Fitch, American Eagle Outfitters and others, have been challenged by dwindling mall traffic as well as heighten competition from H&M, Forever 21 and Zara.
The shuttered stores are the latest in Wet Seal’s woes. Last year it announced it would be closing its Arden B location after reporting annual losses in 2012 and 2013 and lowered sales. The company is also poised to report a third consecutive annual loss and another year of sliding sales for 2014.
Many of the some nearly 4,000 employees laid off with reportedly a one-day’s notice, have taken to Twitter and social media to complain about the company. So too have investors paid attention to the beleaguered retailer: it’s shares are worth less than $1 a share.
The soon-to-be closed stores account for about 48% of Wet Seal’s $316 million in net sales during the first nine months of 2014.
The company said it would record pre-tax charges of $5.4 million to $6.4 million related to the store closures, charges that would include inventory write-offs and employee severance and other job termination costs.