The Wet Seal, Inc. (Nasdaq: WTSLA), a leading specialty retailer to young women, today provided an update on recent developments involving one of its shareholders, Clinton Group, Inc.
Clinton Group has filed with the Securities and Exchange Commission preliminary consent solicitation materials seeking stockholder consent to appoint five new independent directors to replace four of the five current members of Wet Seal’s Board of Directors and fill the one vacant position.
The Board of Directors of The Wet Seal said: “We believe this is the wrong time to disrupt our business with a wholesale makeover of the Board as we prepare for the critical fourth quarter and holiday season. We recognize the immediate need to improve our performance and enhance value for all of our shareholders. As we have previously announced, the Board is in the process of returning to a tested fast fashion strategy that we believe will have a positive impact on results in a matter of months, not years. At this important juncture, bringing in a large number of new directors who are not familiar with the business will deleteriously affect the Company’s ability to improve its performance in the coming months. That would not be in the best interests of all of our shareholders.”
The Wet Seal announced on August 21 that it is taking steps to stabilize its business quickly by returning to its core expertise of fast fashion merchandising. As the Company stated, it believes performance will bottom out in the third fiscal quarter before showing clear signs of improvement in sales and profitability in the fourth quarter. The Company believes it will eventually be able to return to annual EBITDA of $45 million to $50 million.
“The current Board knows Wet Seal and its strengths and weaknesses. It is far more capable of managing a quick and seamless return to our historic and successful fast fashion model than a group of new directors, no matter how experienced they may be.”