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


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