Wet Seal Closing All Stores
Mall-based retailer Wet Seal is planning to close all of its 173 or so stores after failing to turn its business around, according to several media reports. In a Jan. 20 letter obtained by The Wall Street Journal, the retailer notified employees working in the company's Irvine, Calif. headquarters that the office was permanently shutting down and laying off all of its workers. Wet Seal initially filed for bankruptcy two years ago, hurt as mall traffic weakened and teens turned to fast-fashion rivals such as H&M and Forever 21. The filing came shortly after Wet Seal, in January 2015, closed its 338 stores and laid off 3,695 employees. Versa Capital Management, a private-equity firm, bought the company out of Chapter 11 bankruptcy protection for $7.5 million in cash in April 2015 and promised to keep at least 140 stores open. But Wet Seal's business never recovered and the company couldn't raise the necessary funding or find a buyer to keep the brand alive.
Total Retail's Take: Unfortunately, this isn't surprising news for the retail industry lately. The Wet Seal announcement comes less than a month after both The Limited and American Apparel announced they were closing all of their stores and going out of business. Mall staples Sears and Macy's also announced mass store closures this year, with Sears planning to close 150 namesake stores and Kmart stores, and Macy's planning to shut another 100 stores. Indeed, a major reason for the closings is the falling foot traffic at shopping malls.