Wet Seal has filed for bankruptcy protection, its second time in a handful of years.
The Irvine-based teen retailer, founded by Lorne Huycke in Newport Beach in 1962, has 171 stores, all of which are slated to close.
Store closure sales will run until Feb. 28, overseen by liquidators Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC, according to court papers seen by Reuters.
On Jan. 20, Vice President and General Counsel Michelle Stocker wrote a letter to employees saying that “the company was unable to obtain the necessary capital or identify a strategic partner, and was recently informed that it will receive no further financing for its operations.”
The same day the retailer filed a notification with the state that all 148 employees at its headquarters would lose their jobs, effective March 21.
Neither the company nor its owner have returned repeated requests for comment.
Wet Seal was founded in 1962 as Lorne’s and was incorporated as Wet Seal in 1990. The name reportedly came from the founder’s wife who, at a fashion show, said a model in a bathing suit looked like a wet seal.
In its heyday, the retailer expanded into multiple chains. In 1995, Wet Seal acquired roughly 200 Contempo Casuals stores from the Neiman Marcus Group. It also developed Arden B, another fashion brand aimed at women in their 20s and 30s. All 54 Arden B stores closed in mid-2014. The stores were then converted to Wet Seal Plus or Wet Seal stores.
The downhill slide began in 2013, the year the company lost $113 million. Wet Seal shares would go on to lose 99 percent of their value in the 18 months leading up to its bankruptcy in January 2015.
Shortly before filing for Chapter 11 in 2015, the company closed 338 stores, or two-thirds of its U.S. locations and laid off 3,700 employees after a default notice was filed by creditor Hudson Bay Master Fund for around $29 million.
Versa bought the retailer that April for $7.5 million in cash and $20 million debtor-in-possession financing.
The company, then based in Foothill Ranch, shifted to Irvine in 2016. Today Wet Seal employs roughly 3,000 people, mostly at its retail stores.
Financial troubles aside, the company was met with controversy over its labor practices. In 2013, it reached a $7.5 million settlement with plaintiffs who alleged Wet Seal fired African American employees who did not fit the brand’s image.
The company, flailing among its losses, reshuffled its executive team in recent years. In 2015, Melanie Cox was tapped as the company’s CEO, replacing Ed Thomas. Thomas had twice served as CEO for the retailer, first in 2007 and again in 2014.
Contact the writer: hmadans@ocregister.com or Twitter: @HannahMadans
