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Foothill Ranch, Calif. - The Wet Seal Inc. will begin winding down its Arden B brand. Arden B currently operates 54 mall-based stores and an e-commerce website.
In fiscal 2013, Arden B generated net sales of $60.4 million and represented 11% of consolidated net sales. Thirty-one Arden B locations will transition to Wet Seal Plus merchandise and the remaining 23 locations will transition from Arden B to Wet Seal merchandise. Where permissible, Arden B locations will be refreshed with either Wet Seal or Wet Seal Plus signage. The company expects to complete this conversion by the start of the back-to-school selling season in late July 2014.
Through lease expirations and the exercise of early termination provisions, the Company will close 15 Arden B locations through the remainder of fiscal 2014 and 16 Arden B locations in fiscal 2015. For the interim period while Arden B locations remain open, the stores will offer Wet Seal or Wet Seal Plus merchandise, as noted above.
Effective immediately, the Wet Seal merchandising organization assumes responsibility for Arden B stores. The buying, planning and allocation team for Arden B will be impacted by the wind-down. The release of some team members and reduction in other expenses will result in annualized pre-tax cost savings of approximately $1.3 million beginning in the second quarter of fiscal 2014.
Wet Seal expects to incur approximately $100,000 of charges for severance costs in the first quarter of fiscal 2014 and approximately $300,000 of charges for store employee retention programs in the second and third quarters of fiscal 2014. The company also anticipates non-cash asset impairment charges of up to approximately $3 million in the first quarter of fiscal 2014 pertaining to Arden B store assets. In addition, the exercise of early lease termination provisions in fiscal years 2014 and 2015 is expected to result in approximately $500,000 of payments related to unamortized tenant allowances. Wet Seal intends to negotiate with landlords and pursue other alternatives to expedite the transition and exit of the remaining 23 Arden B locations where leases do not expire prior to its fiscal 2015 year end.
“This was a difficult decision that followed a comprehensive review of the business and market dynamics,” said John D. Goodman, CEO. “We would like to thank all of our Arden B team members for their hard work and dedication to the brand, and also extend our gratitude to our loyal customers.”