Teen retailer Wet Seal closing 8 stores in Pa. including one in Springfield

wet-seal

Once a cool brand to teens, California-based teen retailer Wet Seal is shutting all 171 of its stores nationally, including eight in Pennsylvania and three in New Jersey.

The Pennsylvania stores include one at Springfield Mall in Delaware County.

There are also Wet Seals at Lehigh Valley, Wyoming Valley, and Berkshire malls in eastern Pennsylvania. The four other stores are in the western part of the state.

The three closures in New Jersey include one at the Freehold Raceway Mall.

Calls to Wet Seal's corporate office in Foothill Ranch, Calif., were not immediately returned.

The chain -- which has about 3,000 employees on its payroll -- focuses on clothing and accessories for young women. Its items exuded "California cool" in its prime with its swimwear attracting a large following. Now it has become the latest retailer to fall thanks to a battering from digital shopping and falling in-store sales.

"Unfortunately, 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," Michelle Stocker, Wet Seal's general counsel, wrote in a Jan. 20 letter to employees.

Online shopping is another factor, damaging the department store sector: Macy's Inc. is closing 68 more stores this year, and Sears Holding Corp. is shutting 150 more Sears and Kmarts.

Last month, another women's apparel retailer, the Limited, announced it was closing all 250 of its brick-and-mortar stores so it can focus exclusively on online sales. It has since filed for bankruptcy protection.

Retail analysts say teen apparel stores, such as Wet Seal, are particularly vulnerable because  they cater to some of the most tech-savvy shoppers out there and are facing fierce competition from trendier newcomers catering to the fickle teen shopper. Others struggling in this category include the Gap and Abercrombie & Fitch.

"Retailers like Wet Seal and the Limited are in the worst sector of retail, which is apparel," said New York based retail consultant Howard Davidowitz. "Not only that, they are in bad malls, are facing fierce competition from fast fashion retailers, and are all saddled with a ton of debt by having private equity sponsors. They are getting buried by all the debt."

In addition, "the priorities of teens have changed," he said. "They aren't focused on buying jeans and sweaters anymore. Their priority is their iPhone, iPad, and electronics."

Declining mall traffic -- where many of these chains call home -- hasn't helped either, RBC Capital Markets retail analyst Brian Tunick said in his 2017 Outlook report.

"Bricks and mortar stores are feeling [the trend] even more now, given faster growth at brands' own e-commerce sites and increasing mall anchor store closures," Tunick wrote.

Wet Seal began as Lorne’s in 1962 in Newport Beach, Calif.  It was founded by Lorne Huycke. 

In 1990, the company changed it name to Wet Seal. Five years later, the company acquired Contempo Casuals from Neiman Marcus. Those stores were renamed Wet Seal in 2001.

It cruised along in its first decade. But by 2014, it was forced to sell two-thirds of its stores as fierce competition from trendy, fast-fashion retailers, such as H&M and Forever 21, cut into its market share.

By January 2015, Wet Seal filed for bankruptcy. It was acquired by private-equity firm Versa Capital Management for $7.5 million in cash and $20 million debtor-in-possession financing.

But it never regained its footing, and online's relentless rise tipped it over the edge. 

A sales clerk at the Wet Seal at Springfield Mall on Thursday confirmed its imminent closure.

"We haven't gotten a date yet," she said, asking that her name not be used since she wasn't authorized to speak to reporters. "They told us whenever we're out of inventory. But it's still pretty full in here."