unveiled a plan to get its head above water.
The mall-based retail chain said Tuesday that it will close 150 underperforming stores as part of a widely expected restructuring that will be launched under a new chief executive with financing from a famous hedge fund.
The company has appointed a third-party liquidator to manage the inventory liquidations for the closing stores. It expects the store closings to be completed by end of February 2005, and about 2,000 positions will be eliminated.
The cost of the closings will be announced in January and will be reflected in Wet Seal's fourth-quarter results.
"While a difficult to decision to make, it is necessary for Wet Seal to reduce its cost structure and focus on those stores that can deliver the best performance as we implement our new merchandise strategy," said Joe Deckop, Wet Seal's interim chief executive, in a statement. Deckop will be replaced by Joel Waller in February, the current chairman of
Investors were mildly enthused about the announcement, bidding its shares up 4 cents, or 1.9%, to $2.09.
After hemorrhaging market share and posting sales declines for a year, Wet Seal shares have plummeted 78% since the start of 2004. The company has burned through roughly $100 million in cash.
In July, Steve Cohen's S.A.C. Capital Management disclosed a 6.4% stake in the company, giving rise to turnaround predictions. Wet Seal's chairman and chief executive resigned in November, and the company said it got another $40 million from S.A.C. to keep the chain alive.
Some observers consider Cohen's continued interest in the ailing teen clothing retailer an attempt to salvage a sour investment. Analysts have speculated that any turnaround at Wet Seal would probably be centered around its more successful Arden B. concept, which boasts double-digit revenue gains.