A new forecast from Forrester Research credits greater online spending by Canadians, lower shipping costs and more selection for the spending increase.
The teen apparel chain will use the cash to adjust to a “changing retail environment,” including lower mall foot traffic, in part by driving more e-commerce sales and growing its social and digital marketing, CEO John Goodman says. Net sales were down 22.8% in the fourth quarter, and down 8.7% in fiscal 2013, the retailer reports.
Teen apparel retailer The Wet Seal Inc., owner of the Wet Seal and Arden B brands, is making a push to grow in e-commerce following dismal fourth quarter and fiscal year end results. To bolster its efforts, the retailer has raised $27 million from a single institutional investor, that it did not identify in its announcement late yesterday.
The retailer says the funds are in the form of bonds that pay 6% annual interest through March 2017 and are convertible into common stock.
“This transaction enhances our capital structure at a time when our industry is challenged by a number of macro issues, most notably mall traffic and teen shopping patterns,” CEO John Goodman says. “We are embarking on a strategic plan designed to restore comparable-store sales growth, improve merchandise margins and strengthen our market position. We have a prudent capital spending plan for 2014 and will be deploying resources toward the significant opportunities we see to grow our e-commerce business, transform our real estate portfolio and expand our presence in the plus-size market.”
To further those initiatives, Wet Seal added three board members with expertise in social, digital and e-commerce, which Goodman says are “key areas of focus within our business.” In the fourth quarter, The Wet Seal opened 13 and closed nine Wet Seal stores and closed two Arden B stores, it says. Today it operates 532 stores in 47 states and Puerto Rico, including 475 Wet Seal stores and 57 Arden B stores.
“We are moving quickly to execute, and believe the new strategic direction will put us on a path to improving our financial results, stabilizing our operating cash flow and achieving long-term growth,” Goodman says.
The Wet Seal did not break out its web sales in its earnings reports, but says e-commerce accounted for just 6% of its total sales in 2012. It did not give the percentage for 2013. According to the most recent Internet Retailer estimates, it had 2012 web sales of roughly $35 million, up 25% from roughly $28 million in 2011.
For the fourth quarter ended Feb. 1, The Wet Seal reports:
- Net sales were $124.8 million, down 22.8% from $161.7 million in Q4 2012.
- A net loss of $27.5 million, compared with net loss of $85.8 million in the same period last year.
- Consolidated comparable-store sales were down 16.5%, including a same-store sales decline of 15.4% at Wet Seal and 25.0% at Arden B.
For the fiscal year 2013, also ended Feb. 1, the retailer reports:
- Net sales were $530.1 million, down 8.7% from net sales of $580.4 million in fiscal 2012.
- A net loss of $38.4 million, compared with a net loss of $113.2 million in fiscal 2012.
- Consolidated comparable-store sales declined 4.1%, including a decline of 3.6% at Wet Seal and 7.6% at Arden B.
The Wet Seal is No. 361 in the Internet Retailer 2013 Top 500 Guide.