Wet Seal fires CEO amid sliding sales and discrimination lawsuit


Facing sliding sales and a racial discrimination lawsuit, teen retailer Wet Seal Inc. fired Chief Executive Susan McGalla and started looking for a replacement.

In the interim, the Foothill Ranch company will be steered by Chairman Hal Kahn, President Ken Seipel and Chief Financial Officer Steve Benrubi as members of the newly formed Office of the Chairman.

McGalla came aboard as Wet Seal’s CEO in January 2011 after serving as president and chief merchandising officer of rival American Eagle Outfitters Inc. She has overseen the company as sliding sales slashed its stock price by half its value over the last year.


Wet Seal, which operates about 550 stores around the country, cut its outlook for the second quarter ended July on Monday. Sales in stores open at least a year plummeted 13% to 14% through the third week of this month.

The retailer is also facing a racial discrimination lawsuit filed by three former managers who allege that the company had a high-level policy of bias against its African American workers. The lawsuit accuses the struggling clothier of firing and denying promotions and pay to its black employees in favor of hiring white workers who better fit the company’s “brand image.”

The company has denied the allegations, and Benrubi, the company’s CFO, told the Associated Press that McGalla’s firing was “strictly due to the financial performance of the company.”


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