Wet Seal mulls workforce cuts to trim costs

The Company announced that its Board of Directors has authorized a $25 million share repurchase program, to be executed through open market or privately negotiated transactions. The timing and number of shares repurchased will be determined by the Company's management based on its evaluation of market conditions and other factors. The repurchase program may be suspended or discontinued at any time.

Based on the Company's closing share price on January 31, 2013, the $25 million under the share repurchase program represents approximately 10% of the Company's total market capitalization. The repurchase program will be funded using existing cash and cash equivalents on hand, which the Company estimates will be approximately $113 million at the end of fiscal 2012 on February 2, 2013. This cash position reflects payment of February rents and other landlord costs by that time, which is typical.

At the end of fiscal 2011, however, due to the relatively early timing of that fiscal year-end date, the Company had not yet paid its February rents and other landlord costs of approximately $9.5 million. As a result, the Company incurred cash payments for thirteen months of rents and other landlord costs in Fiscal 2012.

Mr. Goodman commented: "The Company is in 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. We are in the early stages of implementation. We very much appreciate the past contributions of the affected team members.

“I would also like to thank Ken Seipel for his efforts over the past two years, especially in his leadership role in the second half of 2012. During that time, Ken partnered with Steve Benrubi to successfully begin restoring our fast fashion model in the midst of Board leadership change and a vacancy in the Chief Executive Officer position. We appreciate Ken’s stewardship during that challenging period for the Company, and we wish him well in his future professional endeavors.

"With these actions addressed, we now have a leaner and more nimble and entrepreneurial organization. Our team is now better structured to take quick and decisive actions to improve merchandising and increase efficiencies throughout all functional areas. To that end, we continue to work diligently towards restoring profitability and positioning the Company to make additional investments to drive future growth.

“Lastly, we are also pleased to be announcing our $25 million share repurchase program. We believe this amount and our execution plans for this program strike an appropriate balance between maintaining a more efficient capital structure for our shareholders and ensuring our financial strength while we stabilize our operating cash flows.” 

The Wet Seal