Apparel Retailer Wet Seal to Close All Stores

Retail Dow Jones Newswires

FILE - In this July 2, 2013, file photo, Shianne Penoli walks past the future location of Wet Seal at the Mount Shasta Mall in Redding, Calif. Wet Seal, a teen clothing retailer, has filed for Chapter 11 bankruptcy protection, the company announced ... Friday, Jan. 16, 2015. (AP Photo/Record Searchlight, Greg Barnette, File) (AP)

Troubled teen retailer Wet Seal LLC is closing all of its stores after it was unable to nail down fresh capital or a buyer. 

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In a letter dated Jan. 20, the retailer notified employees in its Irvine, Calif., headquarters that the office would be permanently closed and all of the workers would lose their jobs. 

"Unfortunately, the company was unable to obtain the necessary capital or identify a strategic partner, and was recently informed that it will receive no further financing for its operations," Vice President and General Counsel Michelle Stocker wrote in the letter, a copy of which The Wall Street Journal reviewed. 

There are 148 employees in the company's headquarters, according to a public notice of the layoffs. Wet Seal's website says the chain has 171 stores in 42 states. 

Earlier this month, the Journal reported that Wet Seal was exploring its options, including a liquidation, sale or restructuring that could take place in or out of bankruptcy court. 

A representative for Versa Capital Management LLC, Wet Seal's private-equity backer, declined to comment Thursday. Wet Seal didn't immediately respond to a request for comment. 

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Wet Seal previously filed for bankruptcy protection in January 2015. Versa later acquired the company out of chapter 11 for $7.5 million in cash, and at the time, promised to keep at least 140 stores open. 

But after Wet Seal's exit from bankruptcy, the teen retailer continued to struggle and saw its sales suffer, even after cutting down the number of its stores, according to people familiar with the matter. 

The layoff notice comes shortly after retailers American Apparel LLC and Limited Stores Co. notified employees they would lose their jobs in connection with bankruptcy filings. More than 3,500 manufacturing employees for American Apparel will be laid off after the retailer was unable to find a buyer to keep its stores and all three manufacturing properties open. Instead, Gildan Activewear Inc. bought the retailer's brand name for $88 million out of bankruptcy. 

Meanwhile, The Limited closed all of its stores before filing for bankruptcy protection this month. Similar to American Apparel, the retailer was able to snag a bid from an affiliate of Sycamore Partners for its brand name and related e-commerce assets. 

Apparel-focused retailers have been particularly distressed in recent years, thanks to falling mall traffic. In 2015, teen retailers including Aéropostale Inc. and Pacific Sunwear of California Inc. also turned to chapter 11 protection. 

Write to Lillian Rizzo at Lillian.Rizzo@wsj.com

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