News Column

Wet Seal Cuts Outlook

September 3, 2014

FOOTHILL RANCH, Calif. (AP) Wet Seal Chairperson Lynda Davey is resigning from her post, a day after the teen retailer disclosed the departure of its CEO. The company also lowered its second-quarter forecast.

The company's stock slid more than 20 percent to a multiyear low on Wednesday.

Davey's resignation is effective on Oct. 1, at which point board member Adam Rothstein will become chairman. Gregory Taxin, president of investment firm Clinton Group Inc., will become a director. The Clinton Group owns a minority stake in Wet Seal Inc.

On Tuesday, Wet Seal said in a regulatory filing that CEO John D. Goodman resigned effective Aug. 26. He had joined the Foothill Ranch, California, company in January 2013. Former CEO Edmond S. Thomas was tapped to take on the role again, beginning Monday.

The retailer now foresees a second-quarter adjusted loss of 15 cents per share. Its prior outlook was for an adjusted loss between 9 cents and 12 cents per share. Revenue totaled $121.2 million. Analysts polled by FactSet expected a loss of 10 cents per share on revenue of $124.3 million.

Wet Seal also wants to raise almost $50 million by selling some of its stock. The company announced a private placement in which it expects gross proceeds of approximately $18.5 million. In addition, it plans a rights offering between $25 million and $30 million.

Shares of Wet Seal dropped 25 cents, or 23.8 percent, to 80 cents in afternoon trading. Earlier in the session the stock fell to 70 cents, its lowest point since April 2004.

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Original headline: Wet Seal chairperson resigns, co. cuts outlook


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