The company also adopted a shareholder rights plans, or poison pills, after Clinton Group, an asset management company, called for the sale of Wet Seal.
The rights plan, which is scheduled to expire on June 30, 2013, will trigger if a person or group acquires 10% or more of the outstanding Class A common stock or announces a tender offer for 10% or more of the Class A common stock.
Wet Seal adopted the shareholder rights plan about a month after Clinton Group called for a sale of the company in the wake of the firing of Susan McGalla as ce0.
The company said it is moving back to fast fashion retailing following 12 consecutive months of comparable store sales declines.
Hal Kahn, chairman of Wet Seal’s board, said the company plans to refocus on fast-fashion merchandise to appeal to its teen customers after 12 consecutive months of comparable store sales declines.
“As we execute on this return to our core expertise, we expect it will take several months to begin to realize the impact of the transition in our merchandise and in-store marketing,” Kahn said. “So, while we expect continued weak performance through the third quarter, we believe that this trend will bottom out in the coming months and that we will begin to see clear signs of improvement in the fourth quarter – ultimately returning to a level of sales and earnings that this strategy has driven for many years. As a result, we believe the Company will be positioned to stabilize the business during the holiday season and 2013.”
The company said on Tuesday that it has appointed a strategic oversight committee to evaluate potential strategic initiatives.
For the quarter ended July 28, Wet Seal reported a loss of $12.4 million, or 14 cents a share, compared with a profit of $2.2 million, or two cents a share, a year ago. Excluding ceo severance charges and other impacts, the per share loss was 7 cents, compared with a year-earlier profit of 3 cents.
The company earlier this month had expected an adjusted loss between 6 cents and 7 cents a share.
Wet Seal recently reported that quarterly sales dropped 9.1% to $135.3 million, while comparable store sales fell 11.1%. E-commerce sales were down 5%.
For its third quarter, Wet Seal estimates net loss per share in the range of 13 to 16 cents and total net sales between $128 million and $133 million. Analysts currently expect a loss of 1 cent a share on revenue of $144.41 million.