Wet Seal Says It Closed 338 Stores, Laid Off Almost 3,700 Workers

The teen fashion retailer, under fire for giving workers a day’s notice they would lose their jobs, finally issued a statement on the layoffs this morning.

This photo from redditor DevoidSauce, taken Sunday at a Wet Seal in Seattle, has gone viral. Redditor DevoidSauce / Via i.imgur.com

Wet Seal, which has refused to respond to press inquiries regarding the abrupt closures and layoffs, said in a statement today it closed 338 stores — or 64% of the 528 stores it operated as of Nov. 1, 2014.

Last month, Wet Seal told investors it planned to close just 60 stores by Jan. 31.

The teen fashion retailer also said it terminated 3,695 full- and part-time employees, some of whom received just one day’s notice before losing their jobs, and despite weeks of reassurances from the company that stores would not close.

“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,” Chief Executive Officer Ed Thomas said in today’s statement. “This is an extremely difficult time for the entire Wet Seal team, and we are doing everything we can to protect the interests of all of our stakeholders, including our employees. We acknowledge and sympathize with how hard these recent events have been on our employees, both those staying with the company and especially those who are leaving the company this week.”

Wet Seal said following the closures it will now run 173 stores and its web business.

The struggling chain has been criticized roundly for convincing employees the business was doing fine throughout the month of December, then abruptly firing thousands of employees via a surprise Friday conference call, giving workers a day’s notice in many cases.

Former employees told BuzzFeed News that many of them learned of the layoffs from other stores, or from receiving boxes to mail back IT equipment such as cash registers. Higher-ups assured employees that inventory was on its way and that massive sales were typical.

Wet Seal said its severance and “one-time termination” costs will be about $700,000. The company has also been criticized for giving its CFO a nearly $100,000 raise the day the layoffs were communicated to store managers.

The chain said the closing stores accounted for nearly half of its sales, which are typically in the range of half a billion dollars a year. Wet Seal has been struggling, in recent years, to identify its target customer, fluctuating between selling to middle-schoolers and college students.

Full statement from Wet Seal:

Wet Seal Announces Store Closures

FOOTHILL RANCH, Calif.—(BUSINESS WIRE)— The Wet Seal, Inc. (Nasdaq: WTSL, the “Company”), a leading specialty retailer to young women, today announced that it was closing 338 retail stores effective on or about January 7, 2015. The Company decided to proceed with the store closures after assessing its overall financial condition and the Company’s inability to successfully negotiate meaningful concessions from its landlords. The store closures unfortunately resulted in the termination of approximately 3,695 full and part-time employees. The Company estimates that the 338 retail stores which were closed represented approximately 48 percent of its net sales for the nine months ending on November 1, 2014. Following the store closures, the Company expects to operate approximately 173 retail stores and its Internet business.

Ed Thomas, CEO of The Wet Seal, Inc., stated, “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. This is an extremely difficult time for the entire Wet Seal team, and we are doing everything we can to protect the interests of all of our stakeholders, including our employees. We acknowledge and sympathize with how hard these recent events have been on our employees, both those staying with the Company and especially those who are leaving the Company this week.”

In connection with the Store Closures, the Company expects to incur estimated pre-tax charges ranging from an aggregate of $5.4 million to $6.4 million, including costs associated with inventory write-off, asset impairments and employee terminations. Charges associated with inventory write-off are estimated to range from $2.5 million to $3.5 million. Charges associated with asset impairments (consisting primarily of write-offs of fixtures, furniture and equipment at the impacted stores) are estimated to be approximately $2.2 million. Charges associated with employee severance and other one-time termination costs arising from the Store Closures are estimated to be approximately $0.7 million. Such estimates do not include any claims or demands which may be made by the landlords of the impacted stores for unpaid rent or otherwise.

The above charges are estimates and the actual charges may vary materially based on various factors, some of which may be beyond the Company’s control. See “Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995” below.

About The Wet Seal, Inc.

The Wet Seal, Inc., a pioneer in fast fashion retailing, sells apparel, footwear and accessories designed for teen girls and young women of all sizes through retail stores nationwide, as well as an e-commerce website. After the store closings, the Company expects as of January 9, 2015 to operate a total of 173 stores in 42 states and Puerto Rico and an e-commerce business at www.wetseal.com. For more company information, visit www.wetsealinc.com.

Via ir.wetsealinc.com

Read more: http://www.buzzfeed.com/sapna/wet-seal-says-it-closed-338-stores-laid-off-almost-3700-work


Wal-Mart Raises Its Minimum Wage To $9 An Hour

The retailer is America’s biggest private employer. Its minimum wage will rise to $9 an hour this year, and $10 an hour in 2016.

Wal-Mart, America’s biggest private employer, is boosting wages for its workers.

The retailer said its minimum wage in U.S. stores will increase to $9 an hour in April, and rise to $10 an hour in 2016. Some department managers will see a pay raise to $13 an hour this summer and $15 next year. About 500,000 associates will get a raise from the change in the first half of this year, Wal-Mart said in a statement today.

CEO Doug McMillon alluded to worker dissatisfaction in a blog post announcing the changes today.

“We frequently get it right but sometimes we don’t,” he wrote. “When we don’t, we adjust.”

“In recent years we’ve had tough economic environments, a rapidly growing company, and fundamental shifts in how customers are shopping,” he continued. “We also made a few changes aimed at productivity and efficiency that undermined the feeling of ownership some of you have for your business. When we take a step back, it’s clear to me that one of our highest priorities must be to invest more in our people this year.”

Executives emphasized on a call today that the increase didn’t mean anything would be taken away from workers.

Wal-Mart’s decision, which compares to the federal minimum wage of $7.25 an hour, may influence other companies to boost their pay as well in order to remain competitive in a world where the unemployment rate has fallen to 5.7%. A lower unemployment rate means workers may have more options — offering higher pay, better benefits and training opportunities is a good way to keep them. Wal-Mart said it had almost 1.4 million U.S. associates in its annual report last year; it’s reasonable to expect the company’s decision to have a ripple effect.

Americans from the retail and fast-food industries have been fighting for a higher minimum wage in recent years, with many pushing for a floor of $15 an hour. Workers have coordinated strikes, walkouts and pickets in cities across the country and politicians on both sides of the aisle have vowed to focus on the plight of low-income Americans.

Once the changes hit in April, Wal-Mart said it will pay an average full-time hourly wage of $13 an hour from $12.85 an hour, and an average part-time wage of $10 an hour from $9.48 an hour.

Executives on today’s call also said that the changes will offer more career opportunities for Wal-Mart employees and lead to better customer service, and eventually benefit shareholders as well. Wal-Mart stock was trading down by about 2.7% on Thursday morning following the announcement.

Wal-Mart shared this image on its website:

Wal-Mart / Via blog.walmart.com

Read more: http://www.buzzfeed.com/sapna/walmart-raising-wages


One Day’s Notice: Wet Seal Under Fire For Surprise Layoffs

Former employees tell BuzzFeed News they got a day’s notice that they would be losing their jobs, even after repeatedly asking if their stores were closing.

Wet Seal’s store closure discussion script:

Part 1; parts 2 and 3 are below. Obtained by BuzzFeed News

“I have to advise you of a decision that will affect you.”

That’s one of the first lines in the script used for laying off employees of teen retail chain Wet Seal this past weekend. “Affect” was putting it lightly, given the decision was to close at least 60 stores within a week, offering hundreds of part-time employees just a day’s notice (managers got a few additional days) that they would be losing their jobs and, in many cases, their livelihood.

The document, obtained by BuzzFeed News and included in full below, illustrates the cold approach Wet Seal took to shuttering stores this month. The struggling retailer, which told investors in December that it planned to close 60 of its 528 stores by Jan. 31, waited until Friday to tell managers which stores would be closing after weeks of assuaging them that 80%-off discounts were normal, shipments were on their way, and the business was doing fine, according to BuzzFeed News interviews with staff.

The worst part: The stores would close just days later. Wet Seal is now at the center of a social media firestorm for ambushing its employees in a manner that former employees and customers have deemed unnecessary, disrespectful, and deeply misleading.

According to interviews and posts on Facebook and Instagram, store managers and assistant managers were instructed to dial into a 2:30 p.m. conference call on Friday, without any knowledge of what the call would be about. District managers delivered the news, and store personnel were left to inform associates they no longer had jobs. Some, including managers, are working into this week until the stores “vacate” — still less than seven days’ notice. The script for telling employees was emailed out after the call, and started with: “As you all know, the company has been struggling financially. We’ve tried cutting costs everywhere we can, but it has not been enough.” It included instructions on how to handle questions about severance — none — and a potential bankruptcy. “I recognize that this news is not easy to hear.”

The company has not replied to requests for comment.

This picture from a Wet Seal at Seattle’s Northgate Mall has gone viral. Redditor DevoidSauce told BuzzFeed News he took it at 4 p.m. on Sunday. Reddit: DevoidSauce / Via i.imgur.com

Employees were, understandably, stunned and deeply frustrated.

“We were seeing signs of 80% off and we knew we never did that in the store,” said Tiffany Alston, a 23-year-old who worked part-time at a Wet Seal in Arlington, Virginia, for 16 months. After Wet Seal began offering such discounts in December, Alston’s manager and an assistant manager asked their district head if the store was at risk of closing.

“Both times, the response was, ‘No, it’s just an awesome holiday sale, we’re not closing, there are several locations going through the same sales and everything,'” she said. “So we said, ‘OK, maybe she’s right.'”

The closing stores, whose supplies of new merchandise tapered off in the past two weeks, have been emptied quickly. Alston said kids hanging out at the mall stole some of her store’s mannequins on Friday; employees weren’t able to catch them. Valentina, 20, who was laid off from a Wet Seal in Chino, California, said her store sold mannequins for $25 and tables for $50. She noted the company didn’t provide boxes to send back leftover merchandise, so she and other part-time associates had to ask for spares from other mall stores and a nearby Walmart. Worse, two employees, who spoke on the condition of anonymity, said some stores received boxes and instructions for packing and mailing back IT items like cash registers before formally learning of the layoffs.

Wet Seal probably wasn’t expecting the jarring nature of its layoffs to go viral. On Sunday, Redditor DevoidSauce posted a banner from a Wet Seal window in Seattle’s Northgate Mall that criticized the chain. The sign, made by employees, displayed a litany of frustrations in the form of a checklist: unpaid and unused vacation and sick time, the abrupt notice for employees who’d spent as many as eight years at the company, the interim chief financial officer’s new $95,000 raise (disclosed, regretfully, in a regulatory filing the same day the closures were announced). The sign also noted the store’s No. 1 sales status in the district and gave thanks to customers.

Employees have posted similar signs in Wet Seal windows at other malls. The images and reprimands to Wet Seal have flooded the company’s Instagram and Facebook pages and are showing up on Twitter with hashtags such as #ClubWetSeal, #BoycottWetSeal and #ForgetWetSeal.

Norwood helped put this sign up at her Wet Seal in Arlington, Virginia. Facebook user Meg Guicciardini / Via facebook.com

Tyra Norwood, 20, helped put up a poster at the Ballston Common Mall in Arlington, Virginia, the same one Alston works at, that reads: “Go online and find out why we are closing. Sad story. Wet Seal sucks. Liars.” She said she worked at the store for roughly 15 to 20 hours a week beginning 9 or 10 months ago.

“I was trying to Google it because I was wondering why we were having all these huge sales — people kept asking us if we were closing, and I said, ‘No, we’re just getting ready for new inventory,’” she said in an interview. “There was never an announcement to the whole store. When they had their conference call, that was the announcement, basically, but there was no warning.”

Working at Wet Seal was a second job for a number of her colleagues, Norwood said. Valentina, who worked between 9 and 15 hours a week, said the job was her main source of income. She’s tried applying for other retail jobs “left and right,” but given chains just staffed up for the holiday season, it’s tough going. A part-time assistant manager in Missouri who spoke on the condition of anonymity told me she supported herself and her young son through her Wet Seal job. Her store also discovered the layoffs ahead of time through a FedEx delivery of boxes and packing instructions that were meant to arrive on Monday, she said.

Transfers weren’t an option, either. Although Wet Seal said it would close 60 locations, it may have shuttered even more. Laid-off employees “may apply for future positions at other store locations,” according to the firing script given to managers, though that comes without guarantees. For some, like Veronica Bohrer, that’s not possible anyway given the Wet Seal she worked at is in Bismarck, North Dakota.

Bohrer, 22, typically worked 20 hours a week, though that sometimes stretched to 30. She said heavy discounts compelled her managers to ask about closures once a week in December, but their bosses reassured them the store would be fine. (Store managers didn’t know, and it’s unclear if district managers did. All the employees believe staff in the corporate office knew in advance, though Wet Seal will not return messages to its CFO and external PR firm addressing these concerns.) She initially learned of the layoffs when another store called to ask if their store received “the box.” Bohrer is an art student and is concerned about finding another job to cover her bills.

“I’m just hoping I can make it in time — the short notice thing has made me feel very uneasy, because I do have bills to pay,” she said in an interview. “I’m also in the military so that’s one thing I can fall back on right now, but it’s not enough to pay all my bills.” She added that’s two to three day drills per month for the Army National Guard.

Those who worked after being notified of closures up to the store’s “vacate date” were offered “retention” bonuses of $150 for assistant managers and $300 for managers, according to a separate document sent to BuzzFeed News.

It’s unclear what awaits Wet Seal, a hot ’90s and early 2000s retailer that has struggled to appeal to its target customer in recent years. The stock continues to trade for pennies on the dollar, and the possibility of a bankruptcy looms. In the layoff script, the correct response for an inquiry about bankruptcy is to acknowledge the company has said it’s a consideration, followed by “I’m not permitted to discuss anything further on that topic.”

When the company announced its CFO’s nearly $100,000 raise on Jan. 2, it also said Wet Seal defaulted on an interest payment on senior convertible notes due on Dec. 31. It’s clearly in serious danger financially, and its actions regarding layoffs have seemingly incited the wrath of consumers as well as former employees, which could very well affect sales.

In the closing script, Wet Seal assistant managers were told to inform employees: “I understand that you may need some time to process this information and that you may have additional questions. I will be available to address any issues you may have. In addition, Human Resources will also be available to answer your questions. We are all here to support you during this transitional period.”

Employees spoke fondly of their store colleagues. One said she overheard her boss crying after the conference call. Another said she was furious she didn’t get a chance to say good-bye to a group that had become “like a family.”

“They should have given us a warning, like two weeks’ notice — I don’t know how they can give us a day’s warning,” Valentina said. “Corporate wasn’t telling us anything … we wanted answers but nobody would give us answers.”

facebook.com

Part 2 of Wet Seal termination script:

Obtained by BuzzFeed News

Part 3 of Wet Seal termination script:

Obtained by BuzzFeed News

FAQ for Wet Seal store closures:

Obtained by BuzzFeed News

Obtained by BuzzFeed News

Obtained by BuzzFeed News

Management “retention program”:

Obtained by BuzzFeed News

Facebook user Zamir Iqbal / Via facebook.com

Read more: http://www.buzzfeed.com/sapna/one-days-notice-wet-seal-under-fire-for-surprise-layoffs


This Is Why Brands Say “Bae”

“To borrow a millennial phrase, we’re on cleek,” said Taco Bell’s incoming CEO. “Not everybody knows what I’m talking about right now. That means you’re on point.”

In the eyes of young people, Taco Bell is “on cleek,” its incoming CEO told investors on a call earlier this month, explaining that it’s millennial speak for “on point.”

w.soundcloud.com

“On cleek” was a mangling of “on fleek,” an actual piece of teen speak that really does mean “on point.” But why was a grown man trying to pull off “fleek” on an investor call?

A new Twitter account, @BrandsSayingBae, delighted the Internet this week, calling out chains from IHOP to Taco Bell for imitating teen vernacular on social media as part of their earnest pursuit for consumer engagement — a holy grail sought through “baes” and “on fleeks.”

The screenshots are entertaining, poking fun at Jimmy John’s for replies like “whatcha waitin for bae,” or Applebee’s for tweeting “#WontonTacos on fleek.” The account’s bio reads, sarcastically: “It’s cool when a corporation tweets like a teenager. It makes me want to buy the corporation’s products.”

@BrandsSayingBae’s current location, according to its bio: Hell.

So why do brands actually say “bae”? Taking a look at recent conference call transcripts, companies speak earnestly of their attempts to “engage” with those digitally-savvy and elusive millennials, connect one-on-one, and have real “conversations.” They love to note that they have millennials of their own in the house — an age group typically classified as 18-34. Greg Creed, who will become the CEO of Taco Bell and Pizza Hut owner Yum! Brands on Jan. 1, went so far as to say, “We’re in the publishing business, we are no longer in the marketing business.”

“There’s not a millennial that wants to be marketed to,” Creed told analysts and investors on Dec. 11. “What everyone wants to have is a dialogue with a brand. And a dialogue happens because you’re engaged with your customers, you’re not marketing at your customers.”

His deputy, Brian Niccol, went on to proclaim Yum’s messaging to be “on cleek.” His repeated use of “on cleek,” in place of “on fleek” is perhaps the best illustration of how earnestly brands are trying to relate to the young consumer — efforts that can earn chuckles from an audience aware that such accounts are not run by teenagers.

“When we do the brand message consistently, we end up in a place where, to borrow a millennial phrase, we’re on cleek,” Niccol said, pronouncing it “cleek.” “Not everybody in this room probably knows what I’m talking about right now. That means you’re on point, all right? That means you have momentum. That’s how millennials talk about, ‘You get me.'”

He went on to note that Taco Bell is “on cleek” because of how well it knows its customers. He noted, also, that Millennials populate the world with about 100 million selfies a day.

Of course, Yum! Brands isn’t unique in its social pursuits, though the company is probably the most candid. McDonald’s spoke last November about its efforts to cultivate one-on-one relationships with customers.

“We’re moving from mass one-way push communications and we’re building deeper, one-to-one relationships that go beyond our restaurants,” Chief Brand Officer Stephen Easterbrook said. “These relationships are about personalized, fun, social engagement that’s interactive, holds the customer in, and works their way,”

Denny’s CEO John Miller touted his chain’s social media efforts and Millennial-targeting earlier this year, noting: “We think we talk to them really well.” He highlighted Denny’s success on Tumblr, College Humor and other social platforms, as well as its high Klout score.

The Klout Score “is how you watch how you’re viewed and favored…few are among the top brands of any brand, including McDonald’s or Starbucks in Klout scores, which is mostly a millennial score,” said Miller, who added he has “several” children in the targeted age group. “People like the brand, what we stand for, how we talk to them and the positions we take.”

So that’s why brands say “bae.”

It is straight-up someone’s job to make a sandwich shop seem more likeable. People used to be blacksmiths.

— BrandsSayingBae (@Brands Saying Bae)

Jerry Lapin, Al Lapin, and Albert Kallis founded IHOP in 1958 with the help of Sherwood Rosenberg and William Kaye.

— BrandsSayingBae (@Brands Saying Bae)

Read more: http://www.buzzfeed.com/sapna/why-brands-say-bae


Exclusive: C. Wonder Is Completely Shutting Down

The chain founded by Tory Burch’s ex-husband informed its employees today that it’s over.

C. Wonder, the whimsical chain created by Tory Burch’s ex-husband Christopher Burch in 2011, is going belly-up, BuzzFeed News has learned.

The company called an internal town hall meeting at 11 a.m. today, where its roughly 100 employees were told the brand would be shutting down, said a person at the meeting who declined to be identified citing a lack of authorization to speak publicly. Today was the last day for all but a handful of employees who will stay on to help C. Wonder close down, said two people familiar with the matter. The meeting lasted 15 minutes or less; most of the Flatiron office emptied out by 1 p.m., the first source said.

C. Wonder’s 11 U.S. stores, already pared down from a massive round of closings in recent months, will shutter completely in the next two to three weeks, while its website is slated to shut down by the end of next week, the person at the meeting said. They added that Chris Burch, who recently relocated his office from the Flatiron office to Miami, was not present at the meeting. C. Wonder has also abruptly shut down its social media accounts on Twitter, Facebook, Instagram, and Pinterest.

Daniela Maron, a spokeswoman for C. Wonder, didn’t immediately respond to a voicemail and email seeking comment.

Venture capitalist J. Christopher Burch opened the first C. Wonder in 2011. The brand, which sells a variety of home goods, jewelry, and knick-knacks, drew immediate comparisons to his ex-wife Tory Burch’s more expensive namesake brand. Some in the industry dubbed C. Wonder an act of “revenge retail,” a mentality that may have pushed the chain into a number of ill-advised, costly leases. The company, for example, spent a couple of years opening an expensive Flatiron store in Manhattan; internally, it’s believed that Chris chose that spot because a hair salon favored by Tory Burch is upstairs.

BuzzFeed News reported in November that C. Wonder planned to close up to 20 of its 32 stores by Jan. 1, depending on how lease negotiations unfolded, and transition into a wholesale brand. Unnamed sources at Burch Creative Capital told WWD at the time that the report was “off-base,” and that the brand would “continue to run freestanding stores.”

The company has 11 U.S. stores listed on its website, excluding a seasonal Nantucket location, and was slated to call them at noon today to inform them of the closures, the person at the meeting said. It also has three international stores and has been in the process of expanding into the Philippines.

Harlan Kent, C. Wonder’s CEO of less than a year, told employees at the town hall meeting that the company tried many tactics to turn itself around in the past six months, from closing stores to cutting staff, but that it wasn’t enough, the person said. He went on to say the board of directors made the decision to close the entire business.

Employees weren’t completely shocked, given recent 75%-off discounts on merchandise and the closures, the person said. Suspicions were also raised after it appeared as though new tenants were scoping out the office and following Chris Burch’s office move, they said.

Sources told BuzzFeed News in November that Chris Burch has distanced himself from C. Wonder in the past year, focusing on other investments instead. He’s been working on a new line with Ellen DeGeneres called E.D. and spending a lot of time in Indonesia, two sources say, where he and a friend acquired a resort called Nihiwatu on the island of Sumba.

Additional reporting by Reggie Ugwu.

Read more: http://www.buzzfeed.com/sapna/exclusive-c-wonder-is-completely-shutting-down


Ex-American Apparel Chief Rallies Workers To Organize At Secret Meeting

Dov Charney appealed to more than 300 current and former textile workers this past Saturday in a backyard meeting in South Central Los Angeles. The American Apparel founder was officially fired in December but refuses to walk away from the company he created in the late ’90s.

Jason Wells / Via BuzzFeed

LOS ANGELES — Standing among more than 300 current and former American Apparel textile workers, Dov Charney took the microphone and launched into an impassioned speech.

“Don’t ask what you can do for me. Don’t ask what you can do for yourselves. Ask what you can do for the company,” the ex-American Apparel chief executive said as the workers erupted into applause.

It was a scene that could have played out years ago on the floor of American Apparel’s downtown Los Angeles factory. But this past Saturday, the backdrop was the concrete backyard of a modest home in South Central L.A., just one day after the company’s new CEO sent a Spanish-language message to factory workers, warning them of “external forces trying to cause trouble and affect our business.”

Surrounded by current and former factory workers — many of them shareholders — Charney relayed his version of the events that led to his official ouster in December after the company’s board first moved to fire him last summer.

To keep the company from being sold, Charney said, he put his trust in a hedge fund named Standard General that effectively gained control of his stake in the business. But rather than represent his interests, the firm went against him, installing a board designed to carry out their will, he said.

As a translator relayed each new revelation to the crowd in Spanish, the workers gasped like they were watching a soap opera.

The people now in charge of American Apparel, Charney continued, don’t know how to manage the delicate balance between the factory and the stores. Products aren’t getting made, they don’t know what to produce, people are getting fired, and hours are being cut, he contended.

What’s more, they don’t have a connection to the history of the company, “and it’s dangerous,” Charney told the employees.

Now, it was time to hit back — the workers must organize, he said.

“It’s not about me, it’s not about you; it’s about us and the special connection we have,” he told the crowd.

After being asked about the worker gathering, an American Apparel spokesperson said the company “is and always has been a brand deeply rooted in social commentary.”

“As such, we support our employees’ right to free speech,” the spokesperson said in an email to BuzzFeed News. “And we remain committed to our core principles of providing fair wages to employees, and to sweatshop-free manufacturing right here in the city of Los Angeles.”

Jason Wells / Via BuzzFeed

The gathering was the latest twist in the long American Apparel saga that began last summer. Charney, who has been unable to regain managerial or financial control of the company he created since his ouster last June, is now appealing to American Apparel’s factory workers, who are central to the retailer’s sweatshop-free, “Made in the USA” ethos.

It’s a vulnerable, largely immigrant workforce that’s faced a slew of uncertainty since American Apparel’s management upheaval began this summer, as Standard General took control of the company and most of the executive ranks turned over. While American Apparel’s new Chief Executive Paula Schneider started in January, it’s still struggling to stabilize — just last month, Schneider had to address an internal pro-Charney email campaign waged by an anonymous current employee, and made headlines for firing two longtime creative directors who worked under the founder.

Schneider seems aware of the potential for unrest among the textile workers, sending an email in Spanish to staff on Friday, reassuring them that their jobs were safe, and warning of “external forces” intent on harming the company. The full memo, obtained by BuzzFeed News, is published below.

It’s unclear how organizing a workforce coalition will help Charney win back his place atop a company that currently won’t even allow him to set foot on the factory floor. But the former executive told his troops on Saturday that it would be in their interest to have him reinstated as the head of American Apparel. He promised better working conditions, a return to the free-spirited culture that made the brand successful, an emphasis on loyalty to the factory workers.

“It’s about where we’re going to go,” Charney said to applause on Saturday. “It’s about sticking together.”

The audience needed little convincing, surrounding Charney for photo ops like a rock star after his address, as representatives of Hermandad Mexicana, an immigration advocacy group, diligently set about taking down names and phone numbers. Later today, the group, which is calling itself the “Coalition of American Apparel Factory Workers United to Save American Apparel,” is expected to issue a statement about the meeting.

Maria Luisa Salgado, a spokeswoman for the group, said the company’s current management “is estranged from the cultural spirit that existed at American Apparel under the leadership of its founder, Dov Charney.” She complained of intimidation and interrogations of organizers by “large and gruff security guards,” calling it “a violation of the United States Constitution and the National Labor Relations Board Act.” In the statement, the group called for an end to “blind reduction” of production hours and the furloughing of workers.

A source inside the company said any cutback in hours is a seasonal adjustment, especially given the holiday quarter, typically the busiest for retailers, just ended.

Charney, who founded American Apparel in 1998, was served with a termination letter in June for a long list of reasons including breaching his fiduciary duty, violating company policy — including sexual harassment and anti-discrimination policies — and misusing corporate assets.

The ousted executive worked as a paid consultant for American Apparel during an internal investigation that began in July, but he was officially fired in December. Charney’s lawyers described the investigation as “a complete sham” and said the decision to terminate him was “completely groundless.” Since then, a group of employees operating under the moniker #TeamDov has started a website petitioning for his return.

American Apparel’s new executives are aware of the pro-Charney insurgency within the retailer. One employee has been sending mass emails to employees slamming new management and Standard General, leading Schneider to respond to the messages in a Feb. 19 memo, BuzzFeed News reported last week. The #TeamDov website, with hundreds of messages showing support for Charney, is publicly accessible.

“I encourage you not to be influenced by unfounded personal attacks or baseless threats about job security sent by outsiders who do not have the company’s best interests at heart,” Schneider said in last week’s memo.

Standard General, for its part, said in December that its goal is to “help American Apparel grow and succeed.”

“We supported the independent, third-party and very thorough investigation into the allegations against Mr. Charney, and respect the board of director’s decision to terminate him based on the results of that investigation,” a Standard General spokesperson said in an email at the time.

American Apparel’s shares have fallen 16% this year to 87 cents each; they fell 16% last year as well. The company hasn’t posted an annual profit since 2009.

American Apparel, similar to chains like Chipotle and SeaWorld, lists unionization as a risk factor in regulatory filings, noting that the formation of such a group could halt work, raise labor costs, and hurt the company’s relationship with its employees.

American Apparel has historically prided itself on paying more than the minimum wage to sewing staff and other manual laborers and offering them benefits like on-site health care and massages, subsidized lunches, and affordable health insurance. Its workers have never unionized, though Charney noted he’s not “anti-union” in a 2004 interview, adding that if American Apparel’s workers wanted a union “they would have one.”

American Apparel CEO Paula Schneider sent this email, in Spanish, to workers on Friday, a source told BuzzFeed News. The translation is below.

Obtained by BuzzFeed News / Via Source

Translation of above email from American Apparel CEO Paula Schneider:


Dear appreciated employees:

As you know, I started at the company at the beginning of the year. I am writing to you to promise you that our commitment to you is still the same.

You are incredibly important to us: American Apparel wouldn’t be a success without your hard work and dedication. This company is much more than clothes-making. We stand up for fair wages and the equal treatment of our employees and all human beings. We will never abandon these values.

I would like to talk about a few things that you have probably heard. Over the past five years, days or hours of work have been cut down, this is not news. The decrease in work that you have seen will balance our inventory, so that we can position ourselves to start the summer/fall season, in full force. Salaries and benefits are still the same. The company is stable. These facts are true now and in the foreseeable future.

I know you feel that Dov fought for you. He protected you, your work and family. I know it must be hard to see him leave, and I will always support your right of expression.

I highly respect what Dov has built here. Like you, I am thankful to him for having started this company. Many of you don’t know me yet, but I share the same passion for the company, and the same belief in employees’ rights. All we do is pursue the goal of making this company great so that we can continue employing the highest number of possible employees with the benefits you deserve.

Please, know that there are external forces trying to cause trouble and affect our business. I ask you please, do not misinterpret actions. I did not come to American Apparel to change its values or its culture. I took this job because I believe in the company’s spirit, the one it has had and will always have. This is just the beginning of our relationship, but I would like to ask you for your trust that together we will achieve impressive things. It’s an honor for me to be the leader of this great company, and above all, to work with all of you.

Yours sincerely,

Paula Schneider

Via Translated by Mariana Marcaletti/BuzzFeed News

With reporting assistance from Mariana Marcaletti.

Read more: http://www.buzzfeed.com/jasonwells/ex-american-apparel-chief-rallies-workers-to-organize-at-sec


Gap Is Shutting Down Piperlime

The brand is Gap’s smallest, with annual revenue of less than $100 million.

RIP Piperlime: 2006–2015.

Gap said today that it will shut down Piperlime, which sells designer shoes, clothing, and accessories, by the end of April to focus on its five other brands. Piperlime brought in less than $100 million in annual sales, or less than 1% of the sales brought in by the company at large.

“The decision was made to allow the company to focus on its top priorities,” spokeswoman Liz Nunan said in an email to BuzzFeed News. “The key priorities for the company heading into the new fiscal year are to focus on its portfolio of five brands — Gap, Old Navy, Banana Republic, Athleta and Intermix, as well as digital and global growth.”

Gap introduced Piperlime as an online-only shoe store in 2006, then expanded into clothing and accessories, carrying both little-known labels and pricier items from Kate Spade, BCBG, and Levi’s. It opened a store in Manhattan in 2012. Just a few years ago, Gap was touting Piperlime as its fastest-growing online property.

Gap has since acquired another chain that plays in the designer business; it bought fashion boutique Intermix in 2013, though Intermix is more of a luxury retailer than Piperlime.

Nunan said the decision “was not made based on any competition or conflict from Intermix.”

Richard Jaffe, an analyst at Stifel, noted that Piperlime’s closure represents “the beginning of changes that will be forthcoming under the new CEO Art Peck.” Peck begins as Gap’s new CEO next month.

Read more: http://www.buzzfeed.com/sapna/gap-is-shutting-down-piperlime


Retail’s Winter Of Death Has Claimed Thousands Of Stores

In the clothing and accessories business alone, eight big-name bankruptcies and closures have hit the retail industry the last two months, shutting more than 1,000 stores. The closed doors are symptoms of a bigger problem: America simply has too many stores.

BuzzFeed News

American retailers selling clothing and accessories have been through a grim winter death march of bankruptcies in the past two months: Wet Seal, Delia’s, DEB Shops, C. Wonder, Gap’s Piperlime, Kate Spade Saturday, Jones New York, and Caché.

If that feels like a lot of big-name bankruptcies, it’s because it is. In clothing and accessories alone, more than 1,000 stores have either ceased to exist or are in their final throes, and thousands of retail employees have lost their jobs. While each of these brands fell for different reasons — and some of their competitors have thrived — the closures are symptomatic of an underlying problem: America simply has too many stores. The current round of shuttered doors and bankruptcies is just the start.

“We have way too much retail space … we are way above any country in the world,” Hana Ben-Shabat, a partner in the retail practice of consultancy A.T. Kearney, told BuzzFeed News. “It was a matter of time after the recession. Everybody said: ‘We need to reduce the space.'”

Indeed, America has a staggering amount of real estate devoted to selling things, even when compared to the rest of the world’s most heavily retailed nations.

The New Rules of Retail – Competing in the World’s Toughest Marketplace / Via Palgrave Macmillan / Robin Lewis and Michael Dart / ICSC calculation from Cushman & Wakefield, KSA and other sources

There was 7.5 billion square feet of shopping-center space in the U.S. in 2013, up from 3.3 billion square feet in 1980, according to the International Council of Shopping Centers. That’s 20 square feet for every person in the United States; the U.K., with the second biggest amount of retail space, has just 3 square feet per person. And that calculation only includes gross leasable space and excludes freestanding retailers; the actual amount of all retail space is much higher.

Caché, best known for selling dresses for proms and other special occasions, said in a bankruptcy filing that one of its major missteps in recent years was expanding to 306 stores, saddling itself with money-losing locations and then struggling to downsize. C. Wonder, a “revenge retail” project out of Tory Burch’s ex-husband Chris Burch, also flailed after rapidly expanding to 32 stores, many in pricey locations.

And while RadioShack had been struggling for years leading up to its bankruptcy filing on Feb. 5, the fact that it had more than 4,000 stores was a giant problem. Its lenders wouldn’t let the chain shutter more than 200 per fiscal year, though the company sought to close many more than that, knowing it was saddled with hundreds upon hundreds of expensive and unproductive stores. Filing for bankruptcy enabled RadioShack to close up to 2,100 locations.

The past quarter “saw a higher level of bankruptcy activity than we’ve seen in many years,” CBL & Associates, a large mall developer and owner, said on a Feb. 4 earnings call. It’s spurred the company’s leasing division to form special teams focused on reducing the impact from 2015 bankruptcies “as much as possible,” CEO Stephen Lebovitz said on the call.

It’s not the cold weather that led to a spate of winter bankruptcies: Retailers tend to report closures and bankruptcies in their fiscal fourth quarter, which ends in January, to take advantage of the busiest shopping season. It could help them get in the black, or provide extra traffic for liquidation sales.

It’s also worth pointing out that claims of the death of the shopping mall, or of brick-and-mortar retail in general, are largely overblown. People are still making trips to top-tier malls, outlets, Wal-Marts, and off-pricers like T.J. Maxx and Nordstrom Rack. But the bar for survival for specialty stores has gotten higher in recent years, and those who can’t keep up with customer demands have been decimated.

“We’re adding very limited new space into the market, so when these stores close, there is still demand for that space, because there isn’t a lot of new space being pumped in, which is different from pre-recession,” ICSC spokesperson Jesse Tron said.

Teen retailers have been hit the hardest, pressured by the rise of fast-fashion companies like Forever 21, H&M, and Zara, where runway imitations are instantly available at $20 a shirt. Chains like Abercrombie and Aeropostale have been shuttering stores and adjusting their manufacturing schedules to keep up, while those like Delia’s, DEB and Wet Seal were simply unable to compete.

“They’re old business models compared to the way H&M, Zara, or Forever 21 do business,” said Allan Ellinger, co-founder and senior managing partner of MMG Advisors, an investment bank that focuses on the retail and fashion industries. “Those are quick response, quick turnover, quick to market retail models that are much more exciting for when a teenager walks into a store and sees something new every month, or in some cases, every week. They’re able to buy disposable-wear.”

Even though Wet Seal tried to play on price, with a well known five for $20 basics deal, it confused customers by jumping between targeting middle school students and college-age girls, and couldn’t produce stylish fashions at the pace of a company built to do that.

“Turning an existing or an older legacy business model into a new quick-response model is almost an impossible undertaking,” Ellinger added. “They don’t have the traction online, the culture, nor do they have the expertise in house.”

A chain like Delia’s, on the other hand, struggled to attract attention online, even listing its clothing on Amazon toward the end. Plus, its $40 dresses and almost $50 jeggings seemed almost absurdly expensive given the new normal of low prices created by the fast-fashion giants.

Gap’s Piperlime and Kate Spade Saturday suffered a different fate of serving as distractions for their large corporate owners, which are looking to double-down on their core businesses. That’s driven, in part, by investor impatience in a less-than-rosy retail environment, and pressure on executives to devote their attention to what they’re good at.

“All of these retailers got overstored, and many of them didn’t really have anything very special,” says Liz Dunn, founder and CEO of retail consulting firm Talmage Advisors. Kate Spade Saturday and Piperlime’s closures “show companies focusing and eliminating distractions, but it also speaks to an investor unwillingness to see huge investment spending on some of these initiatives and a real focus on profitability right now,” she said.

Underscoring such impatience, private-equity firm Sycamore Partners decided last month to shutter Jones New York’s wholesale operation and the label’s 127 outlet stores less than a year after purchasing it.

“Investor tolerance for losses and investment spending is lower than perhaps it would be in a really robust environment for retailers,” Dunn said.

Of course, the story of chains shutting down wouldn’t be complete without mention of the internet. While the web accounts for only somewhere around 15% of women’s clothing sales, it is forcing retailers to reconsider how much space they need to successfully operate their business.

“It’s having a major impact on what’s happening in brick-and-mortar,” MMG’s Ellinger said.

Read more: http://www.buzzfeed.com/sapna/retail-winter-of-death


Michael Moore blasts retailers that are open for business on Thanksgiving

Liberal filmmaker Michael Moore is calling for a Thanksgiving Day boycott on chain stores that are open for business today.

He’s not the only one who is unhappy:

http://twitter.com/#!/WhitneySandefur/status/406001249570414592
http://twitter.com/#!/STR8_KILLER/status/405990677928230912
http://twitter.com/#!/AuzzieBakes/status/405984491216175104


http://twitter.com/#!/kristinpuhl/status/405990220610285568

On the other hand, not everyone who has to work today is upset about it:

A poignant reminder: “there are soldiers deployed around the world who will spend their Thanksgiving maneuvering around IEDs trying to avoid being shot. Pardon me if I don’t have a spare tear to shed for the Walmart cashier who has to settle for Thanksgiving leftovers.”

Read more: http://twitchy.com/2013/11/28/michael-moore-blasts-retailers-that-are-open-for-business-on-thanksgiving/


Canadians Bid Farwell As Target Flees The Country

The chain had major issues in Canada that were well-documented by the business press in the past two years. Today it announced it will shut all 133 stores it operates there, in news that came as little surprise to Canadians.

Target Canada is shutting down and residents are celebrating the end of what was ultimately a watered-down, disappointing version of a popular American chain.

The retailer said today it will shut down its 133 stores in Canada, which it started building out in 2013, putting 17,600 employees out of a job. The company had major inventory issues, which meant customers often walked in to empty shelves, and struggled with the perception it was overpriced relative to U.S. locations, CEO and chairman Brian Cornell said in a blog post today. The company also failed to bring many of its popular American brands into the Canadian stores — such as Cherry Coke and the s’more variant of Goldfish crackers, the Wall Street Journal noted.

“Unfortunately, the negative guest sentiment became too much to overcome,” Cornell said. He noted that the chain was “losing money every day” and that executives “were unable to find a realistic scenario that got Target Canada to profitability until at least 2021.”

Many Canadians are celebrating Target’s demise, or at least expressing a lack of surprise that this day would come. A few are posting to the company’s Facebook page comparing the exit to a death in the family or the loss of a best friend.

When Target entered Canada, it got leases for locations from Zellers, a major Canadian discount chain. Many customers complained that the new Target, which is seen as an upscale version of Walmart in the U.S., was too much like Zellers — namely, cheaper and less nice. Still others felt that Target’s goods were actually inferior to Zellers, as per a report last year from The New York Times that documented the chain’s woes.

Target will book a large $5.4 billion pre-tax charge in the fourth quarter as part of the closings.

Target Canada Facebook page / Via Facebook: rkeyes

Facebook: TargetCanada

“No wonder Target Canada is doing so badly” #gaming #gamers http://t.co/7BUrPjVpgh

— VideoGamerPosts (@Gamer Thoughts BOT!)

I keep hoping @Target Canada will get better, but each time I come, it looks like the zombie apocalypse already hit.

— CharterLaw (@Albertos P.)

Literally the only Jewish display in Target Canada. Only an end shelf, sitting next to a Shark Floor Mop.

— silverwuffamute (@Omelette du UnfÄ›)

The only thing that sucks about Target Canada closing is people losing their job. It wasn’t good and just stick to the U.S. Target.

— OfficialMichele (@Michelle Simpson)

A Redditor complains about the lack of American brands at Target Canada

Winnipeg subreddit / Via reddit.com

Another Redditor shows the pricing perception issues Target Canada had:

Winnipeg subreddit / Via reddit.com

Facebook: TargetCanada

Read more: http://www.buzzfeed.com/sapna/canadians-rejoice-as-target-flees-the-country