Wet Seal To Close 338 Stores, Terminate 3695 Employees; To Record Charges

(RTTNews) - Apparel retailer Wet Seal Inc. (WTSL) said it has decided to close 338 retail stores, effective on or about January 7, 2015. The company took the decision after assessing its overall financial condition and its inability to successfully negotiate meaningful concessions from its landlords.

The store closures resulted in the termination of about 3,695 full and part-time employees. The company estimates that the 338 retail stores that were closed represented about 48 percent of its net sales for the nine months ending on November 1, 2014.

Following the store closures, Wet Seal expects to operate about 173 retail stores and its Internet business.

In connection with the store closures, Wet Seal expects to incur estimated pre-tax charges in a range of $5.4 million to $6.4 million, including costs associated with inventory write-off, asset impairments and employee terminations. The estimates do not include any claims or demands which may be made by the landlords of the impacted stores for unpaid rent or otherwise.

While reporting its financial results for the third quarter in October 2014, Wet Seal indicated that it may file for bankruptcy protection upon failure to meet its immediate liquidity needs. The company has engaged outside advisors to seek strategic and financial alternatives.