Wet Seal Plans To Cut 78 Positions, Lowers Q3 Outlook

(RTTNews) - Wet Seal Inc. (WTSL) Tuesday announced its plans to cut 78 positions in the company, as the women's apparel retailer aims to curb its overall cost structure.

The company said it instituted a workforce reduction resulting in the elimination of a combination of 78 filled and open positions. These include 66 positions at its corporate office, representing a 24 percent reduction in headcount, and 12 positions at the field management level, representing a 20 percent decrease.

CEO Ed Thomas said, "We have quickly begun to develop an action plan to stabilize the business, restore Wet Seal to profitable growth and create long-term value for our shareholders. While always a difficult decision to make, aligning our workforce to our current needs was one of the first steps in this process."

The company expects to incur a one-time severance charge of about $0.6 million in the third quarter. Nevertheless, these cost cutting measures are expected to ave about $5.7 million beginning in the fourth quarter. The company also expects to benefit from an additional $1.3 million in annualized cost savings associated with the implementation of operating efficiencies across the organization, primarily focused on its distribution center.

The company now expects third-quarter adjusted loss of about $0.28 per share, at the low end of its prior outlook $0.22 to $0.28 per share. Analysts polled by Thomson Reuters currently estimate loss of $0.26 per share for the third quarter. Analysts' estimates typically exclude one-time items.