Activist investor Clinton Group seeks to take Wet Seal private

Wet Seal Inc., the Foothill Ranch teen apparel retailer, is in the crosshairs of its activist investor Clinton Group Inc.

The New York hedge fund said in a regulatory filing Wednesday that it is “exploring financing alternatives” to allow itself or one of its affiliates to buy up Wet Seal’s equity “in a ‘going private’ transaction.”

Clinton also said in the filing that it had boosted its stake in the retailer to 8.1%.

The hedge fund has targeted Wet Seal for more than a year, only abandoning its proxy fight with the company last fall when it replaced four Wet Seal board members with its own nominees.

Wet Seal also swapped out Chief Executive Susan McGalla for its current boss, John Goodman, in January.

The company’s revenue sank nearly 6% to $127.7 million in the third quarter ended Nov. 2. Its net loss deepened to $14.9 million, or 18 cents a share, from $14.8 million, or 17 cents a share.

News of Clinton’s efforts helped Wet Seal shares jump in late morning trading in New York, but by early afternoon, shares were trading down nearly a percent, or 2 cents, at $2.57 a share.

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