Struggling retailer Wet Seal (NASDAQ:WTSL) announced it would shutter 338 stores, two-thirds of all locations, resulting in the loss of 3,695 jobs. The chain decided to close the stores after reviewing its financial condition and after failing to negotiate meaningful concessions from landlords.
Last month the company warned that it may file for bankruptcy protection if it did not resolve its cash issues. And earlier this week, the retailer received a notice of default on $27 million in senior convertible loans.
Wet Seal is among a group of teen clothing stores facing tough times due to competition from fast fashion retailers such as H&M and Forever 21. Both Delia's and Deb Store filed for bankruptcy in December, unable to compete.
"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," CEO Ed Thomas said in a statement.
Thomas returned to Wet Seal after John Goodman resigned. Thomas had served as president and CEO from October 2007 through January 2011. Wet Seal has appointed several new executives in the past few months to orchestrate a turnaround. It has also been closing stores, eliminating brands and cutting costs.
The company has posted two years of losses and declines in sales, reported the Associated Press.
The online store and 173 physical Wet Seal locations will remain in operation.
-See this Wet Seal press release
-See this Associated Press article
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