NEW YORK (AP) — Struggling teen clothing retailer Wet Seal is closing 338 stores, about two-thirds of its stores, resulting in nearly 3,700 full- and part-time workers losing their jobs.
The retailer said Wednesday it decided to close the stores after reviewing its financial condition and failing to negotiate meaningful concessions from landlords.
The closings are effective Wednesday.
The company warned Dec. 10 that it may file for bankruptcy protection if it did not resolve its cash issues after reporting another quarter of losses.
Fellow teen clothing retailers Delia's Inc. and Deb Stores filed for Chapter 11 bankruptcy last month, further evidence of business woes among traditional teen retailers.
Wet Seal and other chains are being hurt by stores like H&M and Forever 21 that are wooing the young with fast-changing selections of low-priced fashion. Teens are also more interested in outfitting themselves with the latest tech gadgets than new jeans.
"This was a very difficult decision to make, but after reviewing many other options since I returned to the company in September, our financial condition leaves us no other alternative than to close these stores," CEO Ed Thomas said in a statement issued Wednesday.
Thomas came back to Wet Seal as CEO after John D. Goodman resigned from the post. Thomas previously served as president and CEO of Wet Seal from October 2007 to January 2011.
Wet Seal, which was founded in 1962 and had long been a fixture at malls around the country, has struggled with an identity crisis for years.
"It couldn't decide what it wanted to be when it grew up," said Craig Johnson, president of Customer Growth Partners, a retail consultancy. He added, "It will be hard to see what the future is."
Wet Seal has had two consecutive years of losses as sales have declined.
In its fiscal third quarter, which ended Nov. 1, the company saw its losses nearly triple to $36.9 million. Net sales dropped 9 percent to $104.3 million.
Last April, Wet Seal announced it was closing down its Arden B retail store.
The Wet Seal Inc. said that it estimates the stores closed represented about 48 percent of net sales for the nine months ended Nov. 1, 2014.
Wet Seal plans to keep 173 stores and its online business open.
The Foothill Ranch, California, company expects about $5.4 million to $6.4 million in charges related to the closings.
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