Wet Seal to close Arden B, expand plus-size juniors
Wet Seal (NASDAQ: WTSL) announced on Friday it is shuttering contemporary nameplate Arden B to concentrate on the fast-fashion teen business and the growing plus-size junior market.
The company currently has 54 Arden B stores and 478 Wet Seal units. Some 31 of the 54 mall-based locations will be converted to Wet Seal or Wet Seal+ stores and the rest should be closed by this fall. The changes are expected to be complete by the end of July, in time for the back-to-school selling season.
Stores slated for closing will do so when leases expire, or through early termination provisions.
The company said the move is part of an overall restructuring to focus on plus-size, a market less flooded with trendy fast-fashion items.
"This was a difficult decision that followed a comprehensive review of the business and market dynamics. Our transition strategy for Arden B accelerates our opportunity to expand in the growing junior plus market," said CEO John Goodman.
While Wet Seal stores target teens ages 13 to 23, Arden B had aimed for an older clientele, ages 21 to 39. But in the last fiscal year, Arden B performed poorly compared to Wet Seal. Sales at Arden B stores open at least a year plunged 25 percent in the company's fourth quarter.
Overall, Wet Seal corporate has struggled over the years to compete with fast-fashion brands such as H&M and Forever 21. The company in fiscal 2013 reported a net loss of $38.4 million, which was an improvement from the prior year's net loss of $113.2 million. Since 2009, the company has had 14 quarters of negative same-store sales and most recently, in the fourth quarter of 2013, same-store sales plummeted 16.5 percent.
Arden B had $60.4 million in sales, which represented 11 percent of the company's revenues in fiscal 2013.
Wet Seal expects to have a pre-tax cost savings of $1.3 million in the second quarter of its fiscal year 2014. The company also said it will incur charges and payments of about $4 million over fiscal 2014 and 2015 relating to the exit of the Arden B business.
-See this Wet Seal press release
RadioShack to close 1,100 stores amid plummeting sales
American TV & Appliance closing all stores
Hobby Lobby announces aggressive store openings, squashes closing rumors
Dots begins liquidation sales as it closes all 360 stores
Sprint closes 55 retail stores, cuts hundreds of jobs