January 7, 2015 1:13pm
A fashion icon among the younger generations since being founded in 1962, Wet Seal, Inc. (Nasdaq: WTSL) has recently lost some of its footing with its audience. Announcing today, January 7, 2015 that it will close 338 of their total of 532 stores resulting in a release of 3,965 full and part-time employees. The response from the employees has been nothing short of astounding with hash-tags about the company going viral on nearly every social media site. Despite the negativity and implications of such publicity, is it all bad?
Though it has been reported recently that there is “substantial doubt” that the company would continue to operate successfully, there could be another side to this situation. Wet Seal has survived many fluctuations of response to their products and corporate structures over the many years that they have been in business. The latest response to their stock could prove promising.
Even though the stores that are getting shut down represent over half of their physical locations, they only represent approximately 48% of their income. This shows promise. When thinking about this decision it shows that the company is making the right efforts to recover recent losses and pay back a considerable amount of its corporate debt by keeping the most profitable stores and maintaining their relationship with Foothill Ranch. Foothill Ranch announced that it would continue to maintain 173 stores and the company’s online presence poising the company to reach success.
Regardless of the social media outcry of viral hashtags, #ForgetWetSeal and #BoycottWetSeal, investors seem to be undeterred from trading the Company’s Stock. By Mid-Day representing as high of an increase as 150% at $0.146 and trading a volume millions of shares greater than what we have seen the company do in months.
In the past has shown resilience and seems to be continuing to do so. Sometimes the best decisions are the hardest. “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,” Chief Executive Ed Thomas said in a statement. Though the decision was difficult, the performance in their stock speaks louder than words as it seems the company is allowing the effect of their decision to resonate within the investment community.
Will the Company be able to pull through? It will be a long uphill struggle but it seems likely. The market was expecting them to claim bankruptcy quite a while ago and the executives decided against it. Their dedication to attempting to recover the company is obvious regardless of the difficult and widely unpopular decisions that have had to be made. This is not the mark of a company not quite ready to throw in the towel.
CEO and Founder of UPTICK Newswire, Everett Jolly, with greater than 25 years in the traded markets across the US and Canada has put a buy rating on Wet Seal, Inc. He expects that the company should hit $0.70 by summer time 2015 providing that they continue on this path. Hard decisions must be made and so long as one of them is not bankruptcy, the company is poised for a significant bounce back. Take Pier 1 Imports, Inc. (NYSE: PIR) for example. Many thought that this company was doomed to fail back in 2008 and 2009 after experiencing a drought of sales as a result of the recession. If they could do it in a significantly struggling economy, why wouldn’t Wet Seal, Inc. be able to do it now?
About Wet Seal, Inc.:
The Wet Seal, Inc., a multi-channel specialty retailer, operates stores that sell fashionable and contemporary apparel and accessory items for female consumers. It operates in two segments, Wet Seal and Arden B. The Wet Seal segment offers fashion apparel and accessories for girls through its Wet Seal stores. The Arden B segment provides contemporary fashion apparel, dresses, sportswear separates, and accessories for the contemporary woman through its Arden B stores. The company also operates Web-based stores under the wetseal.com and ardenb.com names. As of May 27, 2014, it operated 532 stores in 47 states and Puerto Rico. The Wet Seal, Inc. was founded in 1962 and is based in Foothill Ranch, California.
Safe Harbor Statement:
Matters discussed in this Editorial contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate”, “believe”, “estimate”, “may”, “intend”, “expect”, and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the sales of the company’s identity protection software products into various channels and market sectors, the issuance of the company’s pending patent application, and the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.