Foothill Ranch-based teen clothier Wet Seal Inc. announced today it will close 338 of its stores, laying off some 3,700 full- and part-time workers, and leaving the struggling company with about 170 retail and online outlets.
“This was a very difficult decision to make, but after reviewing many other options since I returned to the company in September, our financial condition leaves us no other alternative than to close these stores,” said chief executive Ed Thomas.
Once popular in malls, Wet Seal has fallen on hard times, with its stock losing 98 percent of its value over the past year. With debt around $28.8 million, executives have come under fire for failing to pay employees, the Orange County Register reported.
“This is an extremely difficult time for the entire Wet Seal team, and we are doing everything we can to protect the interests of all of our stakeholders, including our employees,” Thomas said.
The company said it would incur estimated pre-tax charges ranging from an aggregate of $5.4 million to $6.4 million, including costs associated with inventory write-off, asset impairments and employee terminations.
Charges associated with inventory write-off are estimated to range from $2.5 million to $3.5 million. Charges associated with asset impairments — mostly write-offs of fixtures, furniture and equipment at stores — are estimated at $2.2 million. Charges associated with employee severance and other one-time termination costs are estimated at $700,000.
