A Fallen Retail Star Shops for a New Outfit

Kathy Bronstein steered her way through Bloomingdale’s at the Fashion Island shopping center in Newport Beach, running her hands along velour sweat suits, pleated miniskirts and ribbed T-shirts.

“Nice jacket, nothing different,” she said, examining a $350 coat before burying her fingers in a furry vest. “Fur vests -- yawn, yawn. Basically, it’s the same thing as last year.”

Bronstein wasn’t bored. The former chief executive of teen-apparel retailer Wet Seal Inc. was just monitoring the merchandise -- and plotting to get back in the game.

Eight months after she was abruptly fired as the company’s sales were sinking, Bronstein is looking for work. Enough already with the beach walks, Pilates classes and brownie baking.

“I’m looking for a small business that I could purchase, build and take public,” Bronstein, 52, said. “I need that excitement and passion. I need the thrill of figuring it out.”

But does retail need Kathy Bronstein? She had a strong reputation as a merchant and was credited with building her old company, based in Foothill Ranch in Orange County, into a chain of 600 Wet Seal, Arden B and Zutopia stores. But she left on a nasty, well-publicized down note, which could drag behind her like a dead weight.

People who have been fired “carry all that baggage” when they try to shift to a new career, said Jeffrey Christian, founder of Christian & Timbers, an executive search firm. And sometimes, he added, displaced executives need to settle for “a smaller win” in the next job.

There are, of course, scores of ousted executives who have bounced back, such as Debby Hopkins, who was Lucent Technologies Inc.’s chief financial officer and is now head of corporate strategy at Citigroup Inc.

Others, including former Mattel Inc. CEO Jill Barad and Warnaco Group Inc. chief Linda Wachner, have not resurfaced -- though both secured multimillion-dollar severance packages and probably don’t need to.

“Firing doesn’t have the stigma it used to have,” said Judy Rosener, a professor at UC Irvine’s Graduate School of Management, who said she met recently with Bronstein and talked about what her next move might be. “It’s the way in which she was fired that makes her story dramatic. People are fired all over the place, and they all go back.”

Bronstein did leave with a healthy financial cushion. As Wet Seal’s chief, she was one of the highest-paid female executives in Southern California. In 2002, her salary rose 21% to more than $1 million. She also earned a $228,000 bonus, $80,777 in lieu of vacation and a $10,000 automobile allowance.

To sever ties, Wet Seal recently agreed to pay her more than $3 million in compensation and allowed her to exercise stock options worth millions more.

Money, however, isn’t Bronstein’s main motivator. She represents a breed of career women who are unwilling to slide into oblivion after having held supercharged jobs, Rosener said, noting: “Psychologically, not to have a card with a title on it, that’s hard.”

Bronstein, a divorced mother with an 11-year-old girl, has learned plenty about herself in the months since she was unceremoniously dumped by the company where she had worked for 18 years, 11 of them as chief executive.

On Feb. 6, the day she was fired, Wet Seal Chairman Irv Teitelbaum told her that “he thought my management style was not conducive to a positive business trend,” Bronstein said during a recent interview at her Newport Beach home.

“We spoke about it briefly. I asked him for further explanation, and he said there really wasn’t any further explanation. He gave me the opportunity to say goodbye to the executives and said he felt it would be best if I left immediately.”

She did. Wet Seal was struggling -- 2002 earnings had plummeted 86%, while same-store sales -- a key measure of growth -- had dropped 5.6%. Still, Bronstein said, she was stunned:

“I came home. I cried. I talked to my family. I talked to my ex-husband. And that was it. There wasn’t a whole lot I could do.”

She did try to retrieve her two dogs, Sassy and Snickers, whom she had taken to doggie “boot camp” in Malibu two days before for three weeks of training.

“I immediately called the boot camp and said, ‘ “Can I get my dogs back? I just got fired from my job of 18 years.’ And they said, ‘No, it really wouldn’t be a good thing,’ ” Bronstein recalled. “When you really need your dogs the most, when you really need that emotional support, they weren’t here.”

Wet Seal has declined to say specifically why Bronstein was fired. Reached for comment, Teitelbaum said: “I have absolutely nothing to say on this issue.”

The Corporate Ladder

It didn’t take Bronstein long to scale Wet Seal’s corporate ladder once she made the leap in 1985 from San Diego apparel retailer Fashion Conspiracy. Seven years after she was hired as general merchandise manager, she was named chief executive of Wet Seal, which had recently gone public.

A few years later, Bronstein steered the company through a bold venture when it bought the 237-store Contempo Casuals apparel chain from Neiman Marcus Group Inc., instantly tripling the number of stores it operated nationwide.

“Kathy stepped up to the plate and, in the main, has hit home runs,” Teitelbaum said in a Times article that ran in April 2002, 10 months before he fired her.

Bronstein strutted her merchandising prowess early in 2001 when she jumped out in front of other teen retailers with flouncy bohemian-style skirts and scooped-neck tops, which quickly caught on with the young-adult set. But when the trend waned the following year, Wet Seal seemed adrift.

“When she was on, she was on,” said Jeffrey Van Sinderen, an analyst with B. Riley & Co. “And sometimes she was really off.”

Wet Seal’s earnings flattened in the middle of last year and turned into losses by the third and fourth quarters. But Bronstein rejects the idea that she could not have turned the business around.

“I just didn’t have the opportunity to put the game plan in place,” she said.

Wet Seal has since hired a new chief executive, former Walt Disney Co. retailing executive Peter Whitford, and continues to struggle. In the fiscal second quarter ended Aug. 2, the company lost $13.4 million as sales slid 14%. It was Wet Seal’s fourth consecutive quarterly loss. The stock price, which dropped when Bronstein’s departure was announced, has gained about 10% this year. Shares closed Friday at $10.97, down 19 cents, on Nasdaq.

The months after her termination were fraught with emotional “highs and lows” for Bronstein, who accused the company of wrongful termination, gender discrimination, retaliatory discharge, fraud, invasion of privacy and emotional distress but later agreed to the severance package and never filed suit. Throughout the spring and summer, she huddled with friends and family, including her daughter, after whom the Arden B chain was named. She reflected on her life and her future, Bronstein said.

“The fall came and here I am, sixth-grade homeroom mother, which is really quite funny,” she said. “My biggest fear when I was in college was that I would end up living in a split-level house, have two kids and drive a station wagon with a dog in the back. Now, as it turns out, I have a station wagon, two dogs and one kid.”

“More than anything, I want to do something I can be passionate about. Otherwise, I’m wasting my time,” she said. “If I can do something to build another business, and help other people, to inspire other people in some way, shape or form, I would.”

Bronstein has been exploring her options, including joining an established company, finding a brand to build, consulting and serving on a corporate board.

She has kept in contact with others in the industry, including vendors and Wet Seal employees. Although she has never been much of a schmoozer, she is getting the hang of networking. She has hired a one-woman public relations firm to help chart her course.

And, of course, she prowls the stores.

‘Casual, After Casual ...’

On her recent trek through Fashion Island, Bronstein bemoaned the casual-chic trend that is making life harder for fashion-oriented retailers such as Wet Seal.

“This whole area is just casual, after casual, after casual,” she said, stepping off the escalator at Bloomingdale’s third floor. “Look at this -- racks of the same T-shirt, racks and racks.”

“Hi, Kathy,” a Bloomingdale’s saleswoman said to the CEO turned stay-at-home mom.

Finished with Bloomingdale’s, Bronstein roamed the shopping center, zipping past a string of former competitors, including the Limited and Bebe, before stopping in front of Arden B, where she admired the window display of hip-hugging skirts, halter tops and off- shoulder sweaters, mostly in pink and black. Inside, Bronstein touched everything, at one point slipping a $59 white halter over her head.

“Cute, very cute,” she said, heaping credit on Arden B President Greg Scott, whom she hired. “He makes me proud to have my daughter’s name on the store.”

Then she was on to an outlet of Forever 21, a Los Angeles-based teen-apparel retailer that used to give Bronstein competitive heartburn with its trendy clothes at lower prices.

“This is the other side of fashion, and it’s all about price,” she said, entering the brightly lighted store and examining the price tag on a mauve polyester halter top. “They do a really good job, and this is what makes a good job even better: $15.80.”

Bronstein is known throughout California’s apparel industry as a woman who knows her merchandise. And some vendors say she will have plenty of people ready to work with her if she returns to retail.

“She knows this business inside and out,” said Moshe Tsabag, owner of clothing maker HotKiss Inc. in Los Angeles, who has known Bronstein for more than two decades. “If she goes back into the business, she’ll be a successful lady again.”

Richard Clareman, president of All Access Apparel Inc. in Montebello, agrees.

“There’s no one better at picking product,” said Clareman, whose company makes the Self Esteem sportswear brand for the juniors market.

“I think Kathy’s one of the most talented merchants in the industry and she’d be an asset to any company that wanted to be associated with her.... I’d want her in my corner before 99% of the other merchants in this town.”

But Clareman said a sort of “anti-Kathy movement” developed in the industry during her Wet Seal tenure. He said the company was known to back out on orders, leaving small vendors to take the loss.

“Wet Seal gave us one of our first orders, and one of our first cancellations,” Clareman said. “It’s Kathy’s way or the highway. It’s always been that way.”

Still, he said, other retailers use similar tactics.

“There’s not a lot of ethics in our business,” Clareman said. “It’s kill or be killed. That’s just how it is.”

It isn’t only in California that Bronstein is known as a steely businesswoman, said analyst Elizabeth Pierce of Sanders Morris Harris, who has followed Wet Seal for years.

“I have talked to a lot of vendors in the New York market that said she is very tough to deal with because she has high standards for herself and for everyone else,” Pierce said. “But they also said she was very talented.

“I think women are perhaps held under the microscope a little more when we are demanding,” she added, “and I think Kathy may have been somewhat a victim of that.”

Bronstein has said the company did not cancel orders unless “terms of the orders have not been adhered to -- that is, delivery date, quality and fit.”

She acknowledged that it might have been “a difficult experience” for some people to work for her but only if they weren’t pulling their weight.

“It was a fast-paced business,” she said, “and if you didn’t stay on top of your responsibilities, it was hard to pick up the pace -- very hard to pick up the pace.”

Holidays She Can Enjoy

Ultimately, Pierce predicts, Bronstein’s talent and creativity will win the day.

“I think a small retailer would love to have her talents,” she said. “You cannot ignore the success she’s had over the last 15 years.”

Whatever she ends up doing next, Bronstein said, she won’t take a new full-time post until the year ends. After more than a quarter-century in retail, she’s looking forward to a rush-free holiday season.

But there is one thing she misses terribly. And it’s not Wet Seal.

It’s those hefty sales reports she used to haul to bed with her and read like bedtime stories.

“I wish I could get one of those selling reports and sit in my bed at night and flip through it,” she said, wistfully. “I love the excitement of seeing what’s selling and what’s not selling -- what the customer’s responding to. It’s a great guessing game.”