Reuters: Regulatory News: UPDATE 2-Wet Seal fires CEO as sales slide

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UPDATE 2-Wet Seal fires CEO as sales slide Jul 23rd 2012, 15:39 Mon Jul 23, 2012 11:39am EDT * CEO to leave immediately * Sees Q2 same-store sales decline 10-11 pct * Shares down as much as 18 pct By Juhi Arora and Chris Peters July 23 (Reuters) - Women's apparel retailer The Wet Seal Inc fired Chief Executive Susan McGalla after the company's same-store sales fell for eleven months in a row, sending its shares down as much as 18 percent. Wet Seal said same-store sales will decline between 10 percent and 11 percent in the second quarter. It had forecast a fall of 7 to 11 percent. The Foothill Ranch, California-based company's stock was down 14 percent at $2.55 early on Monday, making it one of the top losers on the Nasdaq. It has lost more than 40 percent of its value in the last 12 months. Analyst Eric Beder of Brean Murray Carret & Co said McGalla's departure brought to an end one of the most "mismatched experiments" in the retail space. Wet Seal's sales started declining barely months after she took over from Ed Thomas in January 2011. Shareholders have also questioned the company on its failure to use its cash reserves, which stood at $148.1 million as of April 28. "There is something fundamentally wrong at this company and hopefully fresh eyes will turn it around," analyst Brian Sozzi of NBG Productions said. Full-priced selling online and changes to its product line-up failed to yield results for the company, which sells under its namesake and Arden B brands. Sozzi said the company lost customers due to its strategy of offering fewer promotions online. He also said Wet Seal does not have a winning assortment, leading it to significantly underperform rivals such as Aeropostale Inc and American Eagle Outfitters Inc . U.S. retailers in June reported disappointing same-store sales as consumers tightened their purse strings amid an uncertain economic environment. The retailer estimates a second-quarter loss of between 6 to 7 cents per share, before non-cash asset impairment and CEO severance costs. Wet Seal, which also sells accessories such as hats, watches and jewelry, said termination of McGalla's employment would be effective immediately. The company did not provide any reason for the CEO's departure and was not available for comment. Chief Operating Officer Ken Seipel and Chief Financial Officer Steve Benrubi will be co-principal executive officers while Wet Seal searches for a new CEO. Earlier this month, three former employees accused the company's "most senior executives" of discriminating against black store managers since 2008 because they did not fit the image of the U.S. retailer. However, the company denied all allegations and said "it is an equal opportunity employer with a diverse workforce." Link this Share this Digg this Email Reprints

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