Struggling teen apparel retailer Wet Seal Inc. (WTSL) was plunging Tuesday after hiring investment bank Houlihan Lokey to aid in a strategic review. Shares of the Foothill Ranch., Calif.-based retailer were sinking 12% to 34 cents.
Houlihan Lokey was described as joining a larger team, including previously retained strategic adviser FTI Consulting Inc., to help Wet Seal "identify and analyze potential strategic and financial alternatives." In addition to hiring Houlihan Lokey, the company retained William Langsdorf as a senior adviser to the finance team. Langsdorf was most recently CFO of Tilly's Inc. (TLYS) .
The retailer said the strategic review began months ago; it has set no timetable to finish it. The company said it would not update the situation until a specific action is taken or the process is concluded.
Ed Thomas, the company's CEO, in a statement said, "I'm proud of the progress we have made to date in light of the ongoing difficult macro environment and state of affairs at the Company when I joined in September. Given our struggles and challenges, it is prudent for us to continue the review of alternatives. We welcome the addition of these advisors to our team."
The Deal previously reported that Wet Seal's poor balance sheet and deteriorating results combined with tough competition and changing consumer tastes give it a small margin for error headed into the holiday season, a time of the year when most retailers generate most of their profit. The company had opportunities to potentially sell itself on two occasions, but passed, likely because potential offers were not enticing enough, preferring to attempt a turnaround instead, sources previously told The Deal.