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Workforce reductions at Foothill Ranch-based fashion retailer
28 Jan '08
2 min read
The Wet Seal Inc announced that, as part of its strategic review of business operations, which includes various cost-cutting initiatives, the Company has implemented staff reductions affecting a total of 41 employees. In addition, the Company decided it will not fill ten currently vacant positions. Forty-nine positions were eliminated in the Company's corporate offices and two were eliminated in the field.
The staff reductions are expected to result in annualized pre-tax savings of approximately $4.3 million beginning in fiscal 2008. The Company expects to incur a one-time charge of approximately $0.4 million in its fiscal 2007 fourth quarter related to the elimination of these positions. Affected employees were provided with severance packages.
The Company also announced plans to reduce marketing expenditures by approximately $1.8 million in fiscal 2008, primarily by eliminating national print advertising programs deemed ineffective by management.
Assuming the Company's forecasted effective income tax rate of 3%, the Company estimates the described cost savings will benefit fiscal 2008 diluted earnings per share by approximately $0.06.
Ed Thomas, chief executive officer, commented, “As we have previously stated, the Company is undergoing a review of various business functions, with the goal of increasing profitability. We are in the early stages of implementation. Unfortunately, the review has identified the need to reduce our corporate workforce. We very much appreciate the contributions of the affected associates to the Company's past success and regret the need to take these actions.
“With this addressed, we have a corporate organization that is fully able to manage all of our responsibilities. We will continue with our initiatives to further improve merchandising and increase efficiencies throughout all functional areas. To that end, we continue to work diligently towards positioning the Company for sustained growth in the future.”
The staff reductions are expected to result in annualized pre-tax savings of approximately $4.3 million beginning in fiscal 2008. The Company expects to incur a one-time charge of approximately $0.4 million in its fiscal 2007 fourth quarter related to the elimination of these positions. Affected employees were provided with severance packages.
The Company also announced plans to reduce marketing expenditures by approximately $1.8 million in fiscal 2008, primarily by eliminating national print advertising programs deemed ineffective by management.
Assuming the Company's forecasted effective income tax rate of 3%, the Company estimates the described cost savings will benefit fiscal 2008 diluted earnings per share by approximately $0.06.
Ed Thomas, chief executive officer, commented, “As we have previously stated, the Company is undergoing a review of various business functions, with the goal of increasing profitability. We are in the early stages of implementation. Unfortunately, the review has identified the need to reduce our corporate workforce. We very much appreciate the contributions of the affected associates to the Company's past success and regret the need to take these actions.
“With this addressed, we have a corporate organization that is fully able to manage all of our responsibilities. We will continue with our initiatives to further improve merchandising and increase efficiencies throughout all functional areas. To that end, we continue to work diligently towards positioning the Company for sustained growth in the future.”
The Wet Seal Inc
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