Can Wet Seal's New CEO Turn the Brand Around?

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Melanie Cox, the new CEO of teen mall brand Wet Seal, kicked off her vision for the brand’s turnaround on two looks: a "schlumpy" tee and a simple midi-cap sleeve dress.

It’s not exactly the skin-tight bandage dresses Wet Seal’s been stocking over the past few years.

But that clubbing look hadn’t been working for Wet Seal. In January 2015, the struggling retailer closed over 300 stores and filed for bankruptcy. Wet Seal was then acquired in April by Versa Capital Management. After the purchase Cox, who was working for Versa as part of the team that made the decision to purchase Wet Seal, was appointed as Wet Seal’s CEO. She’d previously worked for the brand earlier in her career, and she’s Wet Seal’s fourth CEO in four years.

"I would sit in meetings and be like ‘Guys, there's a fine line between sexy and slutty and we don't want to cross it.’"

This fall, Cox held that midi-dress up as key for Wet Seal’s 2016 revolution. "I literally held it up in the meeting and said "Okay, this is it," Cox said. "I'm holding that up and I'm going, 'Okay, this is sexy.'"

"Up until that point there was a real struggle over the word sexy," Cox told Racked. "It would be like 'Oh, the club. We're going to do the club line, we're going to do sexy, edgy,' and it was being interpreted in this really bad ‘80s, slutty, cheesy way. I'm not kidding. I would sit in meetings and be like ‘Guys, there's a fine line between sexy and slutty and we don't want to cross it.’"

The whole idea is a return to Wet Seal’s California roots, since the brand was born in Newport Beach in 1962. That laid-back, California casual look is how teen girls want to dress today, Cox says. "So many of the cues that these girls are getting are from celebrities, musicians, bloggers," she said. "They're photographed by the paparazzi all over the place and a lot of times, that's in LA."

Cox sent those two styles to the Wet Seal store, without any fanfare, without letting employees know that the tee and the dress were emblematic of the new brand.

"We just shipped it out to the stores and let them put it on the racks and see what happens. Much to our great surprise, they blew out. They just flew," Cox said. "Those styles hit the store, when they sold out, it was like everybody got on board."

Now Wet Seal has a new website and a new logo to go along with its new festival-style, Cali-themed merchandise, and an app on the way. Aimed at the 18-24 demographic, the brand's spring campaign features dreamy images shot in Southern California locales like Malibu State Beach, Zuma Beach, and Palm Springs.

Cox also noted that Wet Seal is focused on growing its plus-size business, particularly online for now, and cutting back on reliance on promotions.

Next up is a new store design, but first Cox and Angelo D'Agostino, vice president of marketing for Wet Seal, made over the brand's headquarters. "I walked into Wet Seal in August and it was dead. It was depressing. It was dead. The energy was non-existent. They'd been in the same building for 17 years and it was bad tan." Cox said.

"Two or three years ago, they were very focused on, I would say, a Bebe customer."

"It was beige. Beige, in every sense of the word," D'Agostino clarified.

After a quick makeover, the Wet Seal HQ is now "industrial glam," with polished concrete floors, West Elm furniture, and dramatic chandeliers. New stores and stores with renewing leases will have a similar look, including Wet Seal’s latest store opening in April in Ohio. Existing stores will get a refresh to "cleanse the palette," as Cox puts it.

"If the lease was signed nine years ago, the store is nine years old, and they've had four different CEOs and there are a lot of different designs out there. Pink mannequins, they're not the prettiest pink. It's not rose quartz pink, it's frickin' fuschia," she said.

The Street writer Brian Sozzi told Racked the difference in Wet Seal’s new direction is obvious. "Two or three years ago, they were very focused on, I would say, a Bebe customer. You would buy one type of trashy outfit to go out to a club, and get alcohol all over it and head home," he said. "[Now] these are clothes you can wear at the gym, at the office, and sitting down at Starbucks and you'll feel very comfortable."

Wet Seal didn’t divulge financial info, but Cox said the plan is to be profitable this year. "We're not going to be opening a lot of stores this year, this year is the year of transformation and investing in what we have. We are developing a new store design, and we plan to open more stores next year, and if there are advantageous locations that come our way and make sense for us, we will consider them," Cox said.

There are challenges ahead, of course. Wet Seal isn’t the only teen retailer to focus on California casual clothes. Does Brandy Melville ring a bell?

"Brandy's great," Cox said. "They have very small cool stores, and they do a tremendous amount of volume, and they are two to three times more expensive than we are." (Comparing a basic tee between the two brands, Wet Seal’s is $6.50 and Brandy Melville’s is $20.)

"The people who it's going to speak to, it's going to speak to really strongly."

Then there’s the looming spectre of fast fashion, with three-level Forever 21 and H&M’s stores. Cox thinks teen shoppers are ready for a change and the smaller, boutique experience at Wet Seal.

"It's more is more is more. You don't even know where to look. And if you're not sure of your personal style yet, that's really hard. Even though you want to try different things, it's overwhelming. We're going to try to take some of that overwhelmingness out," she said.

"Look, we're drawing a line in the sand, we're going to tell the story, you're either going to relate to it and say, 'Wow it's great, I love it, that's my go-to store,' or you're not going to like it and you're going to shop somewhere else. That's okay. The people who it's going to speak to, it's going to speak to really strongly," Cox said.