Struggling teen retailer Wet Seal announced a broad cost-cutting plan today that it hopes can stave off bankruptcy, slashing 2,000 workers and closing 150 stores.
The Foothill Ranch-based parent of 559 Wet Seal and Arden B. stores in 47 states expects the store closings to be completed by the end of February. The company said it has hired a liquidator to auction off inventory.
The total cost of the moves will be absorbed in the fourth quarter ending Jan. 29, the company said in a statement.
Joe Deckop, the interim chief executive officer, called the cutbacks "difficult" but "necessary." By lowering expenses, the company can "focus on those stores that can deliver the best performance," he said.
Wet Seal started the holiday sales season in disappointing fashion. November sales at stores open at least a year had plunged nearly 20%.
Today's news seemed to be a carry-over from the company's most recent financial results. In the fiscal third quarter, it reported a net loss of $24.6 million, or 68 cents a share, for the 13 weeks ended Oct. 30. That compared with a loss from continuing operations of $6.4 million, or 21 cents a share, in the same period last year, when the net loss totaled $7.5 million or 25 cents.
Sales from continuing operations dropped 16%, to $110.8 million, and sales at stores open at least a year slid 12.6%.
The quarterly loss was 15 cents a share less than Wet Seal had forecast due to better than expected sales, fewer price markdowns and lower costs associated with the company's strategic review of its business, the retailer said.