The Wet Seal, Inc. to Exit Arden B Business
Announces Plans to Wind-Down Arden B Operations; Affirms First
Quarter 2014 Financial Guidance
FOOTHILL RANCH, Calif.--(BUSINESS WIRE)--
The Wet Seal, Inc. (Nasdaq:WTSL), a leading specialty retailer to young
women, today announced that it will begin winding down its Arden B
brand. Arden B currently operates 54 mall-based stores and an e-commerce
web site, www.ardenb.com.
In the fiscal year ended February 1, 2014, Arden B generated net sales
of $60.4 million and represented 11% of consolidated net sales.
John D. Goodman, Chief Executive Officer, stated, "This was a difficult
decision that followed a comprehensive review of the business and market
dynamics. We would like to thank all of our Arden B team members for
their hard work and dedication to the brand, and also extend our
gratitude to our loyal customers."
31 Arden B locations will transition to Wet Seal Plus merchandise and
the remaining 23 locations will transition from Arden B to Wet Seal
merchandise. Where permissible, Arden B locations will be refreshed with
either Wet Seal or Wet Seal Plus signage. The Company expects to
complete this conversion by the start of the back-to-school selling
season in late July.
Through lease expirations and the exercise of early termination
provisions, the Company will close 15 Arden B locations through the
remainder of fiscal 2014 and 16 Arden B locations in fiscal 2015. For
the interim period while Arden B locations remain open, the stores will
offer Wet Seal or Wet Seal Plus merchandise, as noted above.
Effective immediately, the Wet Seal merchandising organization assumes
responsibility for Arden B stores. The buying, planning and allocation
team for Arden B will be impacted by the wind-down. The release of some
team members and reduction in other expenses will result in annualized
pre-tax cost savings of approximately $1.3 million beginning in the
second quarter of fiscal 2014.
Mr. Goodman concluded, "With this process underway, our management team
and Board of Directors will be focusing greater attention on our
sweeping strategic initiatives, and this change positions us to take
advantage of opportunities for growth within the Wet Seal brand. We are
making progress against our strategic plan to enhance Wet Seal's
product, merchandising, customer engagement and overall store
performance, as well as drive growth in our e-commerce business.
Importantly, our transition strategy for Arden B accelerates our
opportunity to expand in the growing junior plus market."
The Company expects to incur approximately $0.1 million of charges for
severance costs in the first quarter of fiscal 2014 and approximately
$0.3 million of charges for store employee retention programs in the
second and third quarters of fiscal 2014. The Company also anticipates
non-cash asset impairment charges of up to approximately $3 million in
the first quarter of fiscal 2014 pertaining to Arden B store assets. In
addition, the exercise of early lease termination provisions in fiscal
years 2014 and 2015 is expected to result in approximately $0.5 million
of payments related to unamortized tenant allowances. Wet Seal intends
to negotiate with landlords and pursue other alternatives to expedite
the transition and exit of the remaining 23 Arden B locations where
leases do not expire prior to its fiscal 2015 year end.
First Quarter Financial Guidance and Conference
The Company reiterated its previously announced financial guidance for
the first quarter of fiscal 2014, which includes net loss per diluted
share, before non-cash asset impairments and charges related to the
wind-down of Arden B operations, of between $0.16 and $0.19, and
comparable store sales, including e-commerce, in the negative mid- to
The Company will hold a conference call to discuss first quarter fiscal
2014 financial results on Tuesday, May 27, 2014, at 1:30 p.m. Pacific
Time. The call will be hosted by John D. Goodman, Chief Executive
Officer, and Steve Benrubi, Executive Vice President and Chief Financial
To participate in the call, please dial (877) 407-3982 or (201)
493-6780. A broadcast of the call will also be available on the
Company's web site at www.wetsealinc.com.
A replay of the call will be available through June 10, 2014. To access
the replay, please dial (877) 870-5176 or (858) 384-5517 and provide pin
About The Wet Seal, Inc.
Headquartered in Foothill Ranch, California, The Wet Seal, Inc. is a
leading specialty retailer of fashionable and contemporary apparel and
accessory items. As of April 25, 2014, the Company operated a total of
532 stores in 47 states and Puerto Rico, including 478 Wet Seal stores
and 54 Arden B stores. The Company's products can also be purchased
online at www.wetseal.com
For more Company information, visit www.wetsealinc.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995: This news release contains forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, but are not limited to, the
Company's Arden B exit plans described herein as well as the intent,
belief, plans or expectations of the Company or its management. All
forward-looking statements made by the Company involve material risks
and uncertainties and are subject to change based on factors beyond the
Company's control. Accordingly, the Company's future performance and
financial results may differ materially from those expressed or implied
in any such forward-looking statements. Such factors include, but are
not limited to, those described in the Company's filings with the
Securities and Exchange Commission. The Company will not undertake to
publicly update or revise its forward-looking statements even if
experience or future changes make it clear that any projected results
expressed or implied therein will not be realized.
The Wet Seal, Inc.
Steven H. Benrubi, 949-699-3947
Source: The Wet Seal, Inc.
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