Wet Seal Cuts Costs and Employees; President Resigns

In Industry News, Reports, What's New by Jeff PrineLeave a Comment

Wet SealFoothills Ranch, CA—Wet Seal Inc. announced Friday that Ken Seipel, its president/chief operating officer, would be leaving the company as well as 35 other employees whose jobs have been cut in a latest cost-saving measure.

Seipel, who apparently is leaving to pursue “other opportunities,” had been credited with helping lead the beleaguered retailer—along with Steve Benrubi, chief financial officer—in the search for a new chief executive to replace Susan McGalla who was fired in July.

Last month, John Goodman, a board member, was named as new chief executive officer. He will assume many of Seipel’s duties along with Benrubi.

Meanwhile, the specialty chain retailer eliminated 35 jobs, 32 cut from its corporate offices (some were vacant positions), and another three jobs cut in the field.

The company said it expects to see about $2.5 million in savings at the store level through “staffing efficiency measures” and another $2.1 million in savings from “several other cost savings plans.”

“With these actions addressed, we now have a leaner and more nimble and entrepreneurial organization,” Goodman said in a statement. “Our team is now better structured to take quick and decisive actions to improve merchandising and increase efficiencies throughout all functional areas.”

In addition, two locations of Wet Seal’s Arden B. division, which incurred operating losses of about $1 million in 2012, will close. Wet Seal swung to a third quarter loss in November after legal costs, impairment charges and falling sales hurt the retailer.

In other action, Wet Seal plans some $1.9 million in human resource-related investments, such as training and diversity programs, in collaboration with the U.S. Equal Employment Opportunity Commission (EEOC).

In December, the EEOC found that Wet Seal discriminated against a former store manager after one of the company’s executives complained about too many African American employees at a Pennsylvania store. A class-action lawsuit is pending.

Wet Seal is expected to incur about $2 million in legal fees in employment-related lawsuits.

The Wet Seal board also approved a $25 million share repurchase program.


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