Specialty womenswear retailer, The Wet Seal said it was closing 338 retail stores or around 66 per cent of its store count, effective on or about January 7, 2015.
The apparel retailer decided to close the stores after assessing its overall financial condition and its inability to successfully negotiate meaningful concessions from its landlords.
The store closures have resulted in the termination of approximately 3,695 full and part-time employees.
Wet Seal estimates that the 338 retail stores which were closed represented approximately 48 per cent of its net sales for the nine months ending on November 1, 2014.
Following the store closures, the Company expects to operate approximately 173 retail stores and its internet business.
The retailer expects to incur estimated pre-tax charges of between $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.
While, charges associated with asset impairments, consisting primarily of write-offs of fixtures, furniture and equipment at the impacted stores are estimated to be approximately $2.2 million.
Charges associated with employee severance and other one-time termination costs arising from the store closures are estimated to be approximately $0.7 million.
“Such estimates do not include any claims or demands which may be made by the landlords of the impacted stores for unpaid rent or otherwise,” Wet Seal said.
Wet Seal informed that the charges are estimates and the actual charges may vary materially based on various factors, some of which may be beyond its control.
CEO Ed Thomas said, "This was a very difficult decision to make, but after reviewing many other options, our financial condition leaves us no other alternative than to close these stores.”
“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,” he added. (AR)
