Wet Seal Inc. agreed to pay $7.5 million to settle a federal racial discrimination lawsuit that accused retailer of firing black employees because they didn’t fit the retailer’s “brand image.”

The Wet Seal Inc. on Friday announced that its COO is resigning as the struggling retailer initiates a corporate workforce reduction as part of a broader cost-saving initiative.

Wet Seal Inc. said it has named Clinton Group nominee Lynda Davey as chairman of the board.

The Wet Seal said that two independent proxy advisors, Institutional Shareholder Services and Egan-Jones Proxy Services, recommended that the chain’s shareholders reject efforts by Clinton Group to replace six members of the company’s board of directors.

On the heels of activist investor The Clinton Group’s announced plans to replace some of Wet Seal’s board members, the retailer is advising its shareholders against supporting the move.

The Wet Seal Inc. said it has dropped its temporary shareholder rights plan, citing feedback from stakeholders, and has proposed to expand its board to include two nominees of activist investor Clinton Group.

The Clinton Group Inc., a 7% shareholder in Wet Seal, made a formal request to replace most of the retailer’s current board of directors.

The Wet Seal said it has hired financial advisors and adopted a poison pill that discourages an investor from acquiring 10% of the company.

The Wet Seal reported that net income for the fourth quarter dropped to $1.1 million from $5.3 million a year earlier.

The Wet Seal reported Thursday that net income for the quarter ended July 30 rose to $2.2 million from $1.6 million.

The Wet Seal reported Thursday that net income for the fourth quarter ended Jan. 29 dropped to $5.3 million, compared with $74.2 million in the year-ago period.

Many retailers surprised with solid January revenue reporting on Thursday, despite snowstorms that raged across the country during the month.