Wet Seal officially filed for bankruptcy today after months of seeing its business decline.
The teen chain caught thousands of employees off guard earlier this month by shuttering more than half of its stores, giving many workers just a single day's notice that they would be losing their jobs. The closure of 338 locations also took the financial community by surprise, after Wet Seal told analysts and investors only weeks earlier that it planned to close 60 stores. For months, the company's stock has been trading for pennies on the dollar.
Wet Seal said in a statement today that it filed for Chapter 11 bankruptcy protection and negotiated a financial agreement with B. Riley Financial that will allow it to continue to operate its remaining business. That agreement is subject to court approval.
The company also asked the court for "the authority to make wage and salary payments, continue various benefits for employees, and honor certain customer programs, such as gift cards and returns on merchandise purchased prior to the bankruptcy filing."
Wet Seal's filing comes right on the heels of bankruptcies out of DEB and Delia's. All three are chains that successfully catered to teen girls in the '90s but have struggled more recently. Wet Seal, in particular, has been in a state of dysfunction for more than a year, with a revolving door of executives, steadily declining sales, and the inability to determine whether its core customer is in middle school or college.
"After careful consideration, the Board of Directors unanimously concluded that filing for Chapter 11 was the appropriate course of action for the Company," CEO Ed Thomas said in today's statement. "Overall, we continue to believe in The Wet Seal and remain committed to executing on the strategic steps that we already started. We are thrilled to be working with B. Riley and other constituencies toward the successful and prompt emergence of the Company from Chapter 11."