Wet Seal chairman, 3 board members step down after proxy fight
The chairman and three directors of troubled teen retailer Wet Seal Inc. are leaving and will be replaced by nominees from an activist shareholder that had been fighting to remake the board.
The Foothill Ranch retailer, which operates about 550 stores under the Wet Seal and Arden B. brands, said Friday that Chairman Hal Kahn and board members Jonathan Duskin, Sidney Horn and Henry Winterstern have resigned.
That concludes an ongoing struggle with investor group Clinton Group, a private equity firm that holds a nearly 7% stake in the company. As part of the agreement with Clinton Group, the investor agreed to end its attempt to bypass the company and solicit shareholders’ consent to oust most of the board and replace them with five of its own choices.
Clinton Group has been vocally calling for change at Wet Seal for months as the retailer faced a racial discrimination lawsuit, fired its chief executive and struggled to turn around a year of falling sales.
Greg Taxin, managing director at Clinton Group, told Bloomberg that more than 60% of outstanding shares had voted yes on its proposal to remove board members. Now, Taxin said his firm wants the retailer to hire a new CEO, buy back shares and then weigh selling the company, which had been previously urged by the investor.
“The outcome was what shareholders wanted and will make a big difference in the way the business operates going forward,” Taxin told Bloomberg.
The new board members nominated by Clinton Group include Lynda Davey; Mindy Meads, a former co-chief executive of teen clothier Aeropostale; John Mills, a former chief operating officer of Aeropostale; Dorrit Bern, formerly CEO of retailer Charming Shoppes.
The new board will have a lot of work ahead to bring about a turnaround. Retail analysts say Wet Seal is flailing in a heavily competitive market. The company has stumbled with merchandising missteps and bad luck in a period when fashion tops — traditionally the retailer’s strength — have lost out to the raging fad in colored and printed denim bottoms.
The retailer has seen 13 straight months of slipping sales. Same-store sales fell 12.7% in September.
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