US: Wet Seal cuts jobs and costs, president resigns
The Wet Seal has parted company with its president and chief operating officer Ken Seipel and 35 other employees as the teen apparel retailer implements a number of cost-saving initiatives.
The company said the position of COO will be eliminated. CEO John Goodman will assume direct leadership over store operations, e-commerce and construction, while CFO Steve Benrubi will lead information technology and real estate.
Meanwhile, the California-based retailer has laid off 35 employees, with 32 axed from its corporate offices, and another three jobs cut in the field.
Excluding the elimination of the COO position, the workforce reductions are expected to result in annual pre-tax savings of US$3.8m beginning fiscal 2013. The group expects to incur one-time severance charges of $1.3m in its fourth quarter.
The Wet Seal also announced cost reductions of $2.5m for store labour during fiscal 2013, through staffing efficiency measures and $2.1m for several other cost saving plans.
During its fourth-quarter, the retailer executed early lease terminations for two Arden B stores, which will close at the end of this year. The stores incurred fiscal 2012 operating losses of around $1m.
"The company is in the process of reviewing various business strategies and practices, with the goal of increasing operational efficiency and profitability and aligning our workforce to our current business needs," Goodman said. "We are in the early stages of implementation".
The retailer named board member John Goodman as its new CEO last month, replacing Susan McGalla who left the company at the end of July last year.
The retailer swung to a third-quarter loss in November after legal costs, impairment charges and falling sales hurt the company.
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