Wet Seal considers bankruptcy as Q3 loss widens; closing 60 stores as leases expire

Foothill Ranch, Calif. - The troubles keep mounting for teen retailer Wet Seal Inc., which reported a wider loss for the third quarter amid lower revenues and fees related to its exit from its former Arden B business. The retailer posted a loss of $35.9 million in the quarter emded Nov.1, up from a loss of $12.5 million the previous fiscal year.



Wet Seal, which previously reported it has engaged outside advisors to seek starategic alternatives, indicated it may consider filing for bankruptcy to recapitalize or restructure its debt and obligations. In addition, the company plans to close 60 stores in the fourth quarter of fiscal 2014 as the lease term expires.



Other steps Wet Seal is taking to address financial issues include repositioning the merchandise assortment with a greater emphasis on fashion product, refocusing its marketing program on target customers, and driving growth in its e-commerce business.

Net sales dropped 9% to $104.3 million from $114.9 million. Same-store sales plunged 14.5%.



“While our results came in at the low end of our expectations during the third quarter, we continue to take important steps in our efforts to address our financial position and our ongoing challenges,” said CEO Ed Thomas.



Thomas said solving Wet Seal's cash crunch is crucial "in the very near term" so it can launch new initiatives to "recapture our target customer."



Wet Seal has hired outside advisors, including Houlihan Lokey and FTI Consulting, to assist it in analyzing potential alternatives.



As of November 1, the company operated 528 stores.