Wet Seal, Body Central Continue Their Woes, Defaulting on Debt

Struggling teen retailers had more bad news to share this week, with Wet Seal announcing massive store closings and layoffs and Body Central revealing it has defaulted on its debt. Wet Seal said it is closing 338 stores after it was unsuccessful in obtaining concessions from its landlords, the troubled company said Wednesday morning. The announcement follows a Jan. 2 revelation by the mall-based chain that it had received a notice of default from Hudson Bay Master Fund Ltd., the holder of its senior convertible note. It has a forbearance agreement with the debt holder until Jan. 12. Body Central, meanwhile, announced on Wednesday that it will explore its strategic and financial alternatives, including a bankruptcy filing, after defaulting on its debt. On Jan. 6, the Jacksonville, Fla.-based retailer received a notice of default from holders of $18 million in second-lien notes. The central challenge for these aging retailers is competition from fast fashion behemoths such as H&M and Zara.