Holiday retail sales for 2012 were at their lowest levels since 2008. In fact, experts who crunch the numbers reported a dismal 0.7 percent rise year-over-year. It seems consumers were just not feeling the spirit keeping their wallets close to their pockets. The causes aren’t difficult to pinpoint. Unemployment is still at record levels, consumers were concerned over the uncertainty of the fiscal cliff, the incident in Newtown, Super-Storm Sandy and the list goes on. Whatever the reasons, sales were essentially flat.
Weak numbers are cause for concern for most specialty retailers but Wet Seal Inc. (NASDAQ: WTSLA) is really feeling the pinch. The company, a leading small-cap specialty retailer, caters to teenage girls and young women selling clothes and accessories. Going into the season they were having problems and now it seems those problems are still chasing the company. Execs admitted that “December sales were below our expectations, driven mainly by lower than expected transactions throughout the month.” Teen retail is a highly competitive niche. Wet Seal has worked hard to find the right product lineup to appeal to its young clients but has been less than successful.
Wet Seal’s troubles are nothing new. In July of 2012 the company’s CEO, Susan McGalla, was fired by the board. According to a statement issued by CFO Steven Benrubi her departure was attributed to the dismal financial performance that has plagued the company under her tenure. The Foothill Ranch, California based business is also contending litigation woes. A federal racial discrimination lawsuit was filed in July by three former employees stating that Wet Seal’s management fired African-American employees because they didn’t suit the retailer’s “brand image.” Wet Seal has of course, denied the allegations.
Wet Seal has a market cap of $ 245.53 million and is currently trading at $2.76 per share. Community sentiment is currently a hold on this stock. With the weak sales both online and in brick and mortar stores, pressure from shareholders and recent revolving door issues inthe CEO suite, you have to wonder what will happen next with this beleaguered firm.
The company announced this week that John D. Goodman will serve as its new Chief Executive Officer through January 30, 2016. Goodman is an apparel industry executive with over 25 years of experience honing his skills at companies such as Gap, Inc.(NYSE:GPS), Levi Strauss & Co., Mervyn’s, and Bloomingdale’s.