Wet Seal Announces Store Closures
08 January 2015 - 1:00AM
Business Wire
The Wet Seal, Inc. (Nasdaq: WTSL, the “Company”), a leading
specialty retailer to young women, today announced that it was
closing 338 retail stores effective on or about January 7, 2015.
The Company decided to proceed with the store closures after
assessing its overall financial condition and the Company’s
inability to successfully negotiate meaningful concessions from its
landlords. The store closures unfortunately resulted in the
termination of approximately 3,695 full and part-time employees.
The Company estimates that the 338 retail stores which were closed
represented approximately 48 percent of its net sales for the nine
months ending on November 1, 2014. Following the store closures,
the Company expects to operate approximately 173 retail stores and
its Internet business.
Ed Thomas, CEO of The Wet Seal, Inc., stated, “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. This is an extremely difficult time for the entire Wet Seal
team, and we are doing everything we can to protect the interests
of all of our stakeholders, including our employees. We acknowledge
and sympathize with how hard these recent events have been on our
employees, both those staying with the Company and especially those
who are leaving the Company this week.”
In connection with the Store Closures, the Company expects to
incur estimated pre-tax charges ranging from an aggregate of $5.4
million to $6.4 million, including costs associated with inventory
write-off, asset impairments and employee terminations. Charges
associated with inventory write-off are estimated to range from
$2.5 million to $3.5 million. Charges associated with asset
impairments (consisting primarily of write-offs of fixtures,
furniture and equipment at the impacted stores) are estimated to be
approximately $2.2 million. Charges associated with employee
severance and other one-time termination costs arising from the
Store Closures are estimated to be approximately $0.7 million. Such
estimates do not include any claims or demands which may be made by
the landlords of the impacted stores for unpaid rent or
otherwise.
The above charges are estimates and the actual charges may vary
materially based on various factors, some of which may be beyond
the Company’s control. See “Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995” below.
About The Wet Seal, Inc.
The Wet Seal, Inc., a pioneer in fast fashion retailing, sells
apparel, footwear and accessories designed for teen girls and young
women of all sizes through retail stores nationwide, as well as an
e-commerce website. After the store closings, the Company expects
as of January 9, 2015 to operate a total of 173 stores in 42 states
and Puerto Rico and an e-commerce business at www.wetseal.com. For
more company information, visit www.wetsealinc.com.
Safe Harbor
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: This news release contains forward-looking
statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include statements that relate to the intent, beliefs, plans or
expectations of the Company or its management. All forward-looking
statements made by the Company involve material risks and
uncertainties and are subject to change based on factors beyond the
Company's control. Accordingly, the Company's future performance
and financial results may differ materially from those expressed or
implied in any such forward-looking statements. Such factors
include, but are not limited to, the fact that the Company’s actual
charges and costs resulting from the store closures, including cash
expenditures, could exceed the Company’s estimates for such
charges, costs and cash expenditures; the store closures could lead
to litigation and other adversarial proceedings against the Company
by landlords and others, including demands for unpaid rent and
other damages; the store closures could lead to other adverse
consequences for the Company, including but not limited to,
difficulties in extending the leases at the stores which are
retained by the Company and the retention of employees; the Company
may find it necessary to close additional stores in the future; and
the other factors, risks and uncertainties described in the
Company's filings with the Securities and Exchange Commission. The
Company will not undertake to publicly update or revise its
forward-looking statements even if experience or future changes
make it clear that any projected results expressed or implied
therein will not be realized.
The Wet Seal, Inc.Jean Fontana, 646-277-1214