Following a slew of other troubled teen clothing companies, young women's fashion retailer Wet Seal has filed for Chapter 11 bankruptcy, the company said Friday.
The retailer said it'll receive a $20 million loan from B. Riley Financial to keep its remaining 173 stores open, effectively making B. Riley the majority shareholder of the reorganized company once it exits bankruptcy protection.
Last week the company announced it was closing 338 – about two-thirds – of its brick-and-mortar stores effective ''on or about'' Jan. 7, resulting in the loss of 3,695 full and part-time positions.
According to the company's website, there are four stores still in
North Carolina – including one at
Carolina Place Mall and at Concord Mills – and two in South Carolina.
The quick closing of dozens of stores was a frustrating surprise to many employees and shoppers who took to social media with the hastags #forgetwetseal and #boycottwetseal.
''Our financial condition leaves us no other alternative than to close these stores,'' CEO Ed Thomas said in a statement. ''This is an extremely difficult time for the entire Wet Seal team, and we are doing everything we can to protect the interests of all of our stakeholders, including our employees.''
Wet Seal last month reported another quarter of sales and earnings drops, losses Thomas described as ''ongoing challenges.'' But the Foothill Ranch,
company isn't the only struggling teen retailer.
Last month both Delia's Inc. and Deb Stores filed for bankruptcy, and Aeropostale, American Eagle and Abercrombie and Fitch have all experienced sagging sales as teens gravitate more towards ''fast fashion'' retailers like Forever 21 and Zara, as well as electronics like Beats by Dre and iPhones.
Brian Yarbrough, an Edward Jones retail analyst, said this is the most bankruptcy filings he's seen in the industry in about 15 years. The struggle for teen retailers is driven by a number of factors, said Yarbrough, who doesn't cover Wet Seal specifically.
''Teens would rather buy a $4 t-shirt and replace it in five months than buy a $25 t-shirt and keep it forever,'' Yarbrough said. What's more, there's been a ''lack of excitement'' in trends that drive young shoppers, like jeans in the 2000s, Yarbrough said.
Wet Seal could not be reached for comment.