Pubescent mall rats are likely to get hooked at The Wet Seal. The company operates about 530 shops across the US, and Puerto Rico (down from some 600 stores in 2004), that sell moderate- to value-priced casual clothing and accessories under brand names and private labels. Most of the 475 Wet Seal stores are mall-based and target teenage girls. A contemporary fashion Arden B chain (11% of sales) runs about 55 stores that cater to women age 24 to 34 years old. The Wet Seal also sells apparel through its two banner websites. Amid intense competition from value-priced, fast-fashion chains, such as Forever 21 and H&M, and slumping sales and profits, the company is cutting jobs and trimming its store count.
Geographically, the California-based company operates about 532 retail stores (as of January 2014) in 47 states and Puerto Rico. About 30% of the stores are in California, Florida, and Texas.
The Wet Seal's operations consist of two nationwide specialty retail stores: Wet Seal and Arden B. Both are primarily mall-based chains, with similar products, value price points, and production and distribution processes. The stores are distinct from each other in terms of the target shopper's age and apparel lifestyle -- trend-right and fashion-basic lines are the focus of Wet Seal; differentiated contemporary fashion for any occasion is offered at Arden B. To shore up resources, The Wet Seal shut its 'tween-oriented Zutopia (acquired from Gymboree in 2001) and Contempo chain stores in early 2004.
The Wet Seal reported sales of about $530 million in fiscal 2014 (ended January), down $90 million since fiscal 2012. Sales at the retailer's Arden B chain fell 9%, while Wet Seal store sales declined 5% on a lower store count and declining sale-store sales.
The struggling teen apparel chain also posted a net loss of nearly $38.4 million for the year, versus an even deeper loss of $113.2 million in fiscal 2013.
Wet Seal is struggling to turn its ailing retail business around. In October 2014, it eliminated 78 jobs as part of a cost-savings plan. The job cuts followed the resignation of the retailer's longtime CFO earlier in the month and the firing of its CEO in September. Also, a new chief merchandising officer has been hired by the new CEO, Edmond Thomas (who formerly held the same post from 2007 to 2011), to boost sales and profits at the chain. Thomas is charged with stabilizing the company's operations and reducing the company's overall cost structure. During fiscal 2014 (ended January), the company opened 26 and closed 19 Wet Seal stores and shuttered five Arden B shops. In fiscal 2015 it plans to add 10 new Wet Seal stores to replace some of the approximately 17 stores whose leases will expire during the year. Also, about a dozen Arden B stores are expected to close.
Key elements of the company's turnaround strategy include: improving marketing; re-establishing and strengthening the Wet Seal and Arden B brands; improving merchandise margins; improving store operations and developing a selling culture; repositioning the Wet Seal store base for future growth; growing same-store sales; and expanding the online business.
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