The Wet Seal Inc. has filed for Chapter 11 bankruptcy protection in an attempt to save its remaining retail stores, according to an announcement made Friday.
The statement came just over a week after the teen clothing retailer stated it would be closing 338 locations and laying off 3,700 employees, roughly two-thirds its total chain. The bankruptcy filing listed assets of $10 million to $50 million and liabilities between $100 million and $500 million.
Wet Seal had cautioned last month it was considering bankruptcy as an option if it was unable to settle its cash issues, after reporting yet another quarter of losses.
Similar mall-based retailers Delia’s Inc. and Deb Stores filed for Chapter 11 bankruptcy in December—further evidencing the impact cheap, fast-fashion stores like H&M and Forever 21 have in the current teen fashion marketplace.
Wet Seal started in 1962 as a bikini shack in Newport Beach, California. Canadian retailer Suzy Shier acquired the company in 1984. The company went public in 1990 and expanded over the decade with additions such as Arden B., Contempo Casuals and Zutopia. By 2001, all stores converted to the Wet Seal name.
The company restructured in 2013 after a long streak of issues. Retail-industry veteran John Goodman was brought in January 2013 to assist in refocusing the company after former CEO Susan McGalla was fired in July 2012.
Goodman stepped down September 2014 and Wet Seal was taken over by previous president and CEO Ed Thomas.
Additionally, Wet Seal ran into problems with an investment group that was displeased with its financial performance in 2012. In 2013 the retailer agreed to a $7.5 million settlement in a racial discrimination lawsuit filed by three former employees.
"Wet Seal failed for two reasons: a company that failed to stay in tune with their customers and new rivals like H&M that were able to get cooler merchandise to the stores quicker and with slightly better quality than Wet Seal," according to Brian Sozzi, CEO of Belus Capital Advisors.
A financing deal with investment bank B. Riley could help save some of Wet Seal’s business. They are in talks about a $20 million loan that could finance operations during the Chapter 11 bankruptcy process.
Wet Seal’s shares closed at 4 centers on Friday.