Ahead of the Bell: Wet Seal's dissident holderThe Associated Press
NEW YORK -- A Wet Seal shareholder has reiterated its push for the teen clothing company to sell itself and is now looking to replace some of the retailer's board members.
The Clinton Group Inc. investment group announced late Wednesday that it plans to seek written consent from other Wet Seal stockholders on its proposed board actions.
The Clinton Group wants to remove four of Wet Seal's board members and replace them, as well as fill one vacant seat. The firm said that it wants to install new independent directors who will look to maximize Wet Seal's value.
"It is time for shareholders to put in place a Board that will work feverishly to fix the damage, repair the brand and earnestly consider the Company's strategic alternatives," Joseph DePerio, senior portfolio manager for Clinton Group, said in a statement.
Last month Wet Seal Inc. said it had been in talks with the Clinton Group. The company did not immediately respond to a request for comment Thursday.
Wet Seal has struggled to find the right product lineup to lure young women. Its sales trends worsened this summer, and the retailer fired its CEO in July. Susan McGalla had led the Foothill Ranch, Calif., company since January 2011. Wet Seal is looking for a new CEO.
Shortly after news of McGalla's firing broke, Clinton Group, which owns a minority stake in Wet Seal, urged the company's board to sell rather than look for a new CEO. Clinton Group said at the time that depending on the board to hire another CEO charged with turning the business around was too uncertain a path.
The Clinton Group said its board nominees include: Raphael Benaroya, founder of the United Retail Group; Dorrit Bern, former chairman, president and CEO of Charming Shoppes Inc.; Lynda Davey, chairman and CEO of investment bank Avalon Group Ltd. and Avalon Securities Ltd.; Mindy Meads, former president and co-CEO of Aeropostale Inc.; and John Mills, president of consulting firm SDE.
On Tuesday Wet Seal announced that it hired financial advisers and adopted a shareholder rights plan designed to protect itself from any takeover attempt. A day later the retailer reported a second-quarter adjusted loss of 7 cents per share on revenue of $135.3 million. Analysts polled by FactSet expected a loss of 7 cents per share on revenue of $136.7 million.
Wet Seal said Tuesday that its board appointed a strategic committee of three board members who will make recommendations on the company's spending and look for ways to boost shareholder value. The board also hired the firms Guggenheim Securities LLC and Peter J. Solomon Co. to act as financial advisers on a variety of issues, including shareholder value.
At the same time the board adopted a shareholder rights plan that runs through June 30, 2013. Current shareholders will receive the right to buy preferred stock if someone acquires more than 10 percent of the company's common stock, or announces a tender offer for more than 10 percent of the company's common stock.
Wet Seal's stock has dropped more than 35 percent over the past 12 months. For the year to date, the shares are off 16 percent.