WET SEAL INC 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.
