Teen retailer Wet Seal's flagship stores have struggled to compete against trendsetting competitors like Forever 21, and it shows in the company’s sales.
January sales at stores opened at least a year plunged 9 percent, Wet Seal said. The decline was due to a weak performance by its flagship stores, despite increased sales at Wet Seal’s other concept, Arden B., which sells fashions targeting women ages 25 to 35.
“Our overall January sales results were below our expectations,” said CEO John D. Goodman in a statement.
Wet Seal, a Foothill Ranch-based retailer that operates more than 500 stores nationwide, has had trouble reclaiming the success it once had when it set fashion trends.
The company has been undergoing several internal changes. Earlier this month, the company announced it had cut 35 jobs. Two executives have also resigned this month—President and Chief Operating Officer Ken Seipel as well as Senior Vice President of Store Operations Barbara Cook. The company said Cook has accepted work elsewhere and Seipel is pursuing other opportunities.
Wet Seal said it would save $3.8 million a year starting in fiscal 2013 due to the 35 job cuts and plans to no longer have a chief operating officer position. The company will also have a $1.3 million one-time severance charge in its fiscal fourth quarter due to the employment changes.
Gabriella Santaniello, senior vice president of retail market research at Wedbush, said she believes the management changes can only be a good thing.
“I think they need to get the appropriate people hired and start making changes at the store level,” Santaniello said.
She says Forever 21 can be a tough competitor for Wet Seal because of its sheer size. Some Forever 21 locations are sort of like mini-department stores.
“It’s very difficult to compete with Forever 21, with the sheer volume that they do, and the pricing power that they have,” she added.
One area of growth for Wet Seal could be its Arden B. stores, she said. If the company positioned Arden B.’s prices below its competitors like Guess and Bebe, it might draw more customers. Unlike Wet Seal’s flagship stores, Arden B.’s sales are growing.
Wet Seal did not immediately return a call for comment.